Strength in WisdomTree Mortgage Plus Bond's Process Pillar is partially offset by an Average People Pillar rating, leading to a Morningstar Medalist Rating of Neutral. The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy’s management team earns an Average People Pillar rating. The strategy's effective investment approach earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a considerable underweight position in corporate bonds and A rated bonds compared with category peers. The strategy's parent organization earns the firm a Below Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Morningstar's style-agnostic investment process evaluation looks for strategies that should be able to outperform their Morningstar Category index on a risk-adjusted basis over time. WisdomTree Mortgage Plus Bond Fund earns an Above Average Process Pillar rating.    The predominant contributor to the rating is its parent firm's superior long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.4 stars. The parent firm's five-year risk-adjusted success ratio of 57% also influences the rating. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. Their relatively high success ratio suggests that the firm does well for investors and that this fund may benefit from that. Lastly, the process is limited by the instability 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.

 Compared with other funds in the Intermediate Core-Plus Bond Morningstar Category, this fund takes on significantly lower credit risk. But in terms of long-term interest-rate sensitivity, it hews closely to its average peer over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Relative to the average strategy in the category, the managers have been substantially underweight corporate bonds in recent years. In the latest month, the strategy has also relatively underweighted corporate debt compared with Morningstar Category peers. Additionally, there's been a notable bias away from A rated bonds over the past few years. Similarly, in recent months, the strategy also had less exposure to A rated bonds than peers. Finally, during the past few years, the fund leaned meaningfully away from debt with one- to three-year maturities. In recent months, the strategy also had less exposure to debt with one- to three-year maturities compared to its peers.

 This strategy has a modest 3.2% 12-month yield, lower than its average peers' 3.9%. Plus, its 30-day SEC yield (a measure similar to yield-to-maturity) sits at 3.7%. While a lower yield may deliver less income, it also tends to indicate lower credit risk. The portfolio holds assets with a higher average surveyed credit quality of AA, compared with the typical peers' BBB, and its non-investment-grade stake is 3% of assets, compared with its average peers' 8%. Strategies with lower credit risk can typically withstand market turmoil more effectively.

Above Average

Process

WisdomTree Mortgage Plus Bond Fund earns an Average People Pillar rating. Jeff Dutra, the longest-tenured manager on the strategy, provides strong guidance, bringing forward 20 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.0 stars, indicating that their risk-adjusted returns have been in line with the category average. The team boasts an experienced corps of listed portfolio managers, with three others supporting Jeff Dutra. Together, they average 15 years of listed portfolio management experience.  None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Average

People

WisdomTree is improving, but its shaky global fund lineup and uncertain trajectory hold its rating to Below Average. 

WisdomTree’s research organization has long been a strength. Under CIO Jeremy Schwartz, the team has generated creative, economically sound ideas and evolved them into investable products, like the efficient core series. A recent focus on investor education spawned the Portfolio Analysis Tools Hub, an online platform that taps the team’s brainpower to help investors make better investment decisions.

The firm’s product lineup is a mixed bag. To complement its core lineup of fundamentally weighted strategies, WisdomTree has recently launched funds targeting established factors instead of trendy themes—an encouraging reorientation. Yet the shutdown of WisdomTree U.S. Growth and Momentum ETF calls WisdomTree’s commitment to these funds into question, and vestiges from its laxer product-development era look ripe for closure. Its European lineup features risky trading tools that are hard for investors to use well. 

WisdomTree’s future may hinge on WisdomTree Prime, its blockchain-based digital wallet. The launch reflects founder and CEO Jonathan Steinberg’s conviction in the disruptive potential of the blockchain. Prime shouldn’t hurt WisdomTree fund investors (most funds on the platform are zero-fee), but it may distract the firm from shoring up its core offering.

Below Average

Parent

WisdomTree Mortgage Plus Bond Fund

MTGP is an actively-managed fund of U.S. securitized intermediate-term debt primarily agency mortgage-backed securities, which are rated investment grade and high yield.

Flush with cash, domestic banks are looking to put some of that capital to work in credit markets. Recent data suggests those institutions are wading back into the collateralized loan obligation (CLO) and mortgage-backed securities (MBS) markets.

Buyers Returning to MBS Market

When it comes to bonds, advisors and investors are searching for appealing levels of income and reduced Treasury in preparation of the Federal Reserve potentially disappointing regarding multiple rate reductions this year.

Mull Mortgage-Backed Securities for Reduced Treasury Risk

Following an avalanche of interest rate hikes by the Federal Reserve spanning 2022 and 2023, an array of high-quality bond classes sport tempting yields. That includes various forms of U.S. government debt.

MBS Enthusiasm Could Lift This ETF

By Jeremy Schwartz, CFA, Global Chief Investment Officer In 2022, mortgage-backed securities (MBS) posted the worst annual return since the inception of the Bloomberg U.S. Mortgage Backed Securities Index.

Finding Value Amid Wall of Worry in Bonds

WisdomTree Bloomberg Floating Rate Treasury Fund

WisdomTree US High Yield Corporate Bond Fund

By Kevin Flanagan Head of Fixed Income Strategy and Scott Welch, CIMA ® Chief Investment Officer, Model Portfolios This article is relevant to financial professionals who are considering offering model portfolios to their clients. If you are an individual investor interested in WisdomTree ETF Model Portfolios, please inquire with your financial professional.

Learn to Yield

With 10-year Treasury yields hovering around 4.84%, the flirtation with 5% is ongoing and dangerous, spooking many fixed income investors in the process. However, it pays to remember that performances across the bond market are not linear.

Good Time to Consider Mortgage-Backed Securities

With mortgage rates at the highest levels in decades, it's reasonable to expect new mortgage applications will decline, but that doesn't mean fixed income investors should carry negative sentiment toward mortgage-backed securities (MBS). MBS are one of the largest corners of the bond market, accounting for nearly a quarter of the U.S.

Mull Mortgage-Backed Securities With MTGP

In 2021, there is a real struggle for income. Advisors are contending with a delicate balancing act of sourcing income in a low-yield environment while avoiding taking on too much credit or duration risk.

Refresh Income Proposition With Mortgage-Backed Securities

Most investors are quite comfortable with Treasuries, corporate bonds and/or municipals in their fixed income allocation, but the securitized space is often overlooked. Perhaps the most well-known component within this universe is agency mortgage-backed securities.

A Fresh Idea For Bond Investors

With income becoming harder to generate via traditional sources, advisors may want to consider a multi-asset approach to bolster equity and fixed income-laden portfolios. A good place to start is with the Global Multi-Asset Income Model Portfolios, which are part of WisdomTree’s menu of Modern Alpha Model Portfolios.

News for WisdomTree Mortgage Plus Bond Fund ETF (MTGP)