WisdomTree Emerging Markets Corp Bd ETF earns a Morningstar Medalist Rating of Neutral with strength in areas such as Process offset by weaker spots such as People. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The management team doesn't personally invest much alongside shareholders. This is a large contributor to the strategy's Below Average People Pillar. The strategy's investment approach stands out and earns an Above Average Process Pillar rating. The strategy's parent organization earns the firm a Below Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. WisdomTree Emerging Markets Corp Bd Fd earns an Above Average Process Pillar rating.    The primary contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 61%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. Impressive risk-adjusted performance also bolsters the rating. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. Lastly, the process is limited by the turnover of talent across its parent firm. The firm's asset-weighted manager tenure of three years suggests it could do more to retain portfolio managers.

 The investment strategy as stated in the fund's prospectus is as follows: 


The investment seeks a high level of total return consisting of both income and capital appreciation.  Under normal circumstances, the fund will invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in corporate debt. The manager attempts to maintain an aggregate portfolio duration of between two and ten years under normal market conditions. The fund may invest up to 20% of its net assets in derivatives, such as swaps, and U.S. Treasury futures and forward currency contracts. It is non-diversified.

 This strategy has a modest 4.7% 12-month yield, lower than its average peers' 6.2%. It also has a 6.4% 30-day SEC yield (a measure similar to yield-to-maturity). Typically, a lower yield comes with the benefit of less credit risk.

Above Average

Process

WisdomTree Emerging Markets Corp Bd Fd earns a Below Average People Pillar rating. The team benefits from the combined average five-year excess return of each manager, which indicates that the funds they manage have beat an average manager. However, the rating is held back by the turnover of talent across its parent firm. The firm's asset-weighted manager tenure of three years suggests it could do more to retain portfolio managers. The parent firm's five-year success ratio of 50% also holds the rating back. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.


Anthony A. Routh, the longest-tenured manager, has six years of portfolio management experience. The average Morningstar Rating of the strategies they manage is 4.5 stars, demonstrating excellent risk-adjusted performance relative to category peers. Anthony A. Routh has an experienced listed co-manager. Together, they average 10 years of portfolio management experience. None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

Below Average

People

WisdomTree is an exchange-traded fund provider whose proprietary indexes underpin many of its funds. After the firm's core lineup of fundamentally weighted funds lost its luster in a difficult value environment, WisdomTree faces an identity crisis.

WisdomTree has plugged the holes in its value-oriented lineup with trendy thematic funds. Offerings that aim to capitalize on hot topics like cloud computing and genetic advancement fall outside the firm's realm of expertise and look like Band-Aids to curb outflows, not well-vetted long-term investments. Predictably, this point-and-shoot product-development approach had led WisdomTree to shut down funds at a lofty rate.

Bucking an industrywide, investor-friendly trend, WisdomTree has modestly trimmed fees on just a handful of funds. Such stubbornness calls into question whether the publicly traded firm prioritizes fundholders' or shareholders' interests. Recent inflows have helped, but severe outflows over the late 2010s have weakened the firm's financial position over the past several years.

The firm's research organization remains a highlight. Despite scattershot product launches, the team has demonstrated the ability to also hatch economically sound ideas and develop them into practicable products, like its funds that mechanically exclude state-owned enterprises. 

WisdomTree's commitment to investor education is another plus. Its Advisor Solutions platform, launched in 2016, provides advisors with a wealth of resources, and recent partnerships with Onramp Invest and Gemini should help advisors navigate cryptocurrency complexity. WisdomTree can read its clients' needs, but its trendy fund lineup shows that it's too willing to cater to their wants. It retains its Below Average rating.

Parent

WisdomTree Emerging Markets Corporate Bond Fund

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