NEW YORK, Aug. 08, 2017 (GLOBE NEWSWIRE) -- WisdomTree (NASDAQ:WETF), an exchange-traded fund (“ETF”) and exchange-traded product (“ETP”) sponsor and asset manager, today announced that the WisdomTree Emerging Markets ex-State-Owned Enterprises Fund (XSOE) and the WisdomTree China ex-State-Owned Enterprises Fund (CXSE) will add exposure to China A shares in seeking to track their underlying indexes in relation to a special index rebalance scheduled to occur after the close of business on August 11, 2017.
Jeremy Schwartz, WisdomTree Director of Research, said, “Over the past year, WisdomTree has been evaluating the opportunity to add China A shares to our proprietary indexes. Given the continued openness of the Chinese domestic stock market to foreign investors, we are operationally ready to implement this change.”
“The addition of China A shares to these indexes will provide investors with a more complete, diversified exposure to China,” Schwartz continued.
The underlying indexes tracked by CXSE and XSOE will add the 50 largest companies by float adjusted market capitalization that meet the index requirements. The A share exposure will be capped at 25% for the WisdomTree China ex-State-Owned Enterprises Index and 5% for the WisdomTree Emerging Markets ex-State-Owned Enterprises Index.
How Excluding State-Owned Companies Has Led to Attractive Performance
The WisdomTree China ex-State-Owned Enterprises Fund (CXSE) and the WisdomTree Emerging Markets ex-State-Owned Enterprises Fund (XSOE) provide exposure to a more targeted group of emerging market equities by excluding state-owned companies1. While the addition of China A shares should not materially impact the funds, the inclusion, in combination with the exclusion of state-owned companies, allows WisdomTree to capitalize even further on opportunities resulting from China’s economic shift toward consumption and services.
“Rather than overexposing investors to energy and state-run banking sectors which are dominated by state-owned enterprises, CXSE is significantly allocated toward consumer discretionary and technology sectors,” said Schwartz. “The strong performance of CXSE and XSOE, which has a broader strategy, has been driven by this exposure to growth-oriented and consumer-centric companies. We believe the addition of China A shares will further enhance these strategies by allowing for access to new securities as well as a more complete exposure to the market.”
In June, WisdomTree implemented fee waivers2 for both CXSE and XSOE, reducing the expense ratios for both funds to 0.32%.
The WisdomTree China ex-State-Owned Enterprises Index has an average annualized total return of 13.31% since index inception, while the WisdomTree Emerging Markets ex-State-Owned Enterprises Index has an average annualized total return of 2.91% since index inception3. View standardized performance for CXSE here and XSOE here.
Performance is historical and does not guarantee future results. Current performance may be lower or higher than quoted. Investment returns and principal value of an investment will fluctuate so that an investors shares, when redeemed, may be worth more or less than their original cost. Performance data for the most recent month-end is available at www.wisdomtree.com.
You cannot invest directly in an index. Index performance does not represent actual fund or portfolio performance. A fund or portfolio may differ significantly from the securities included in the index. Index performance assumes reinvestment of dividends but does not reflect any management fees, transaction costs or other expenses that would be incurred by a portfolio or fund, or brokerage commissions on transactions in fund shares. Such fees, expenses and commissions could reduce returns. WisdomTree, its affiliates and their independent providers are not liable for any informational errors, incompleteness or delays or for any actions taken in reliance on information contained herein.
Additional Index information is available at www.wisdomtree.com.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Fund before investing. To obtain a prospectus containing this and other important information, please call 866.909.WISE (9473), or visit wisdomtree.com to view or download a prospectus. Read the prospectus carefully before you invest.
There are risks associated with investing, including possible loss of principal. Foreign investing involves special risks, such as risk of loss from currency fluctuation or political or economic uncertainty. Investments in emerging or offshore markets are generally less liquid and less efficient than investments in developed markets and are subject to additional risks, such as risks of adverse governmental regulation and intervention or political developments. Funds focusing their investments on certain sectors and/or regions increase their vulnerability to any single economic or regulatory development. This may result in greater share price volatility. Investments in currency involve additional special risks, such as credit risk and interest rate fluctuations. The Fund may invest in the securities included in, or representative of, its Index regardless of their investment merit and the Funds may not attempt to outperform its Index or take defensive positions in declining markets. As these Funds can have a high concentration in some issuers, the Funds can be adversely impacted by changes affecting those issuers.
China A Shares carry addition risk, the nature and extent of intervention by the Chinese government in the Chinese securities markets, uncertainties in the Chinese tax rules governing taxation of income and gains from investments in A-shares could result in unexpected tax liabilities for the fund which may reduce fund returns. Any reduction or elimination of access to A-shares will have a material adverse effect on the ability of the fund to achieve its investments objective. There is potential for unavailability of A-shares to which the fund will seek to obtain exposure through investing in other investment companies. A-shares are issued by companies incorporated in the People's Republic of China ("PRC"). The A-share market in China is made available to domestic PRC investors and certain foreign investors, including those foreign investors that have been approved as Renminbi Qualified Foreign Institutional Investors ("RQFII") or as Qualified Foreign Institutional Investors ("QFII"). The Fund's ability to achieve its investment objective is dependent on the ability of other ETFs and counterparties to obtain their QFII or RQFII quota. If the fund is unable to obtain sufficient leveraged exposure to the CSI 300 due to the limited availability of necessary investments or financial instruments, the fund could, among other things, as a defensive measure, limit or suspend creation units until the adviser determines that the requisite exposure to the index is obtainable. During the period that creation units are suspended, the fund could trade at a significant premium or discount to its NAV and could experience substantial redemptions.
Please read each Fund’s prospectus for specific details regarding each Fund’s risk profile.
WisdomTree Funds are distributed by Foreside Fund Services, LLC in the U.S. only.
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About WisdomTree
WisdomTree Investments, Inc., through its subsidiaries in the U.S., Europe, Japan and Canada (collectively, “WisdomTree”), is an exchange-traded fund (“ETF”) and exchange-traded product (“ETP”) sponsor and asset manager headquartered in New York. WisdomTree offers products covering equities, fixed income, currencies, commodities and alternative strategies. WisdomTree currently has approximately $45.3 billion in assets under management globally. For more information, please visit www.wisdomtree.com or follow us on Twitter @WisdomTreeETFs.
WisdomTree® is the marketing name for WisdomTree Investments, Inc. and its subsidiaries worldwide.
1 WisdomTree defines state-owned enterprises as those having government ownership of more than 20% of outstanding shares.
2 The net expense ratio of 0.32% for CXSE reflects a contractual waiver of 0.31% through July 31, 2018. The net expense ratio of 0.32% for XSOE reflects a contractual waiver of 0.26% through July 31, 2018.
3 Performance data as of June 30, 2017.