WisdomTree Emerging Mkts Effcnt Cr ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's investment process inspires confidence and earns it an Above Average Process Pillar rating. The strategy’s management team earns an Average People Pillar rating. 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

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Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. WisdomTree Emerging Markets Effcnt Cr Fd earns an Above Average Process Pillar rating. 

The main driver of the rating is its parent firm's excellent 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 strengthens the process. 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 respectable 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 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 total return.  The fund seeks to achieve its investment objective by investing in emerging markets equity securities and U.S. Treasury futures contracts. It invests in a representative basket of emerging markets equity securities generally weighted by market capitalization. Under normal circumstances and the fund will invest approximately 90% of its net assets in the above-referenced equity securities. It is non-diversified. 

 The portfolio is overweight in communication services by 2.9 percentage points in terms of assets compared with the category average, and its technology allocation is similar to the category. The sectors with low exposure compared to category peers are industrials and consumer defensive, with industrials underweighting the average portfolio by 2.6 percentage points of assets and consumer defensive similar to the average. The portfolio is positioned across 420 holdings and is relatively concentrated. Specifically, 54.2% of the strategy's assets are housed within the top 10 holdings, as opposed to the typical peer's 25.3%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 12% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Above Average

Process

WisdomTree Emerging Markets Effcnt Cr Fd earns an Average People Pillar rating. Marlene Walker-Smith, the longest-tenured manager on the strategy, boasts 12 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.5 stars, demonstrating encouraging risk-adjusted performance. Marlene Walker-Smith draws on a supporting cast of four additional listed managers. Together they average five years of listed portfolio management experience. As a team, they manage 113 investment vehicles together, with a Bronze asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha in aggregate. The fund has had about average portfolio manager turnover compared to other teams. Long-term stability strengthens a team's rating as it tends to support positive results. The most recent documented departure was within the past two years. 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 Emerging Markets Efficient Core Fund

NTSE is an actively managed portfolio of Emerging market equities and US Treasury futures contracts.

WisdomTree 90/60 US Balanced Fund

Core allocations – they're the bedrock of investor portfolios. With all sorts of big, indexed strategies out there that track the market, it can be tricky to innovate and offer an appealing spin in an ETF format.

Combine Treasuries and Active Core Equities in NTSX

Taken a look at emerging markets lately? They're picking up some steam to start the year thanks to low valuations and a degree of separation from the domestic U.S. market that's expecting a recession.

News for WisdomTree Emerging Markets Efficient Core Fund ETF (NTSE)