WisdomTree US Shrt-Term Corp Bd’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Gold. The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy's sensible investment philosophy merits a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in corporate bonds and A rated bonds compared with category peers. 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

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 US Shrt-Term Corp Bd Fd earns a High Process Pillar rating.    The leading factor in the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The parent firm's excellent risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.4 stars, also influences the rating. Strong risk-adjusted performance also reinforces the process, as shown by 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.

 Compared with other funds in the Short-Term Bond Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity 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. Compared with the average strategy in the category, the managers have been substantially overweight corporate bonds in recent years. In the latest month, the strategy has relatively overweighted corporate debt compared with its peers as well. Additionally, there's been a notable overallocation to A rated bonds over the past few years. Compared with category peers, the strategy had more exposure to A rated bonds in the most recent month. Finally, during the past few years, the fund leaned meaningfully away from debt with 20- to 30-year maturities. In recent months, the strategy also had less exposure to debt with 20- to 30-year maturities compared to its peers.

 This strategy's 12-month yield is 3.5%, lower than its average peers' 3.7%. Plus, its 30-day SEC yield (a measure similar to yield-to-maturity) sits at 4.9%. A lower yield tends to indicate lower credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been lower than the average yield of its Morningstar Category peers. The portfolio has a lower average surveyed credit quality of BBB, compared with the typical peers' A and it holds no non-investment-grade assets, despite the average peers' 2%. Strategies that take on more credit risk tend to be at their best when markets are as well. This risk contributes to strong performance during bull markets at the cost of losing more on the downside.

High

Process

WisdomTree’s team is valuable but does not stand out as one of the industry's best, warranting an Average People Pillar rating. There are two managers listed on the fund: Anil Katarya, Travis King. Experience on the team is abundant, with 17 years of average portfolio management experience. Together, they manage a total of four strategies, with a Bronze asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

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 US Short Term Corporate Bond Fund

SFIG tracks an index composed of investment grade, short-term, US bonds. Constituents are selected and weighted by fundamental company and bond risk characteristics.

In the fixed income space, the two primary risks confronting investors are credit risk and interest rate risk. The former can be amplified in the world of corporate credit and the latter can exacerbate those woes.

Favorable Traits Abound in This Corporate Bond ETF

Bond yields and real yields recently traveled a long way in short order, spooking bond market participants, but some experts believe opportunity remains in some corners of the bond space. Investment-grade corporate credit is part of that conversation.

Consider Credit With This High-Quality ETF

Amid speculation that the Federal Reserve is at or nearing the end of its interest rate tightening cycle and that the central bank could prove successful in engineering a soft landing for the U.S. economy, there's optimism that high-yield corporate bonds are poised for upside.

SFIG: Prime Idea for Corporate Bond Exposure

WisdomTree Barclays Yield Enhanced U.S. Short-Term Aggregate Bond Fund

While the recent January jobs report brings hope that the U.S. economy could stave off a potential recession in 2023, it also breeds worry that interest rates could stay elevated for longer than the capital markets expect. As such, investors will need a short-term rate strategy in their bond portfolio.

Shield Against Rate Fluctuations With This Short-Term Bond ETF

WisdomTree Bloomberg Floating Rate Treasury Fund

Interest rates currently sit at a target range between 2.25%-2.50% after the latest 75 basis point rate high by the Federal Reserve this week. The increase comes in response to June's unexpected 9.1% CPI as the Fed remains committed to its fight against inflation.

While the Fed Continues to Hike Rates, Expect Bond Market Volatility

Advisors are quickly discovering that traditional fixed income strategies just aren't cutting it, particularly with significant exposure to long-dated Treasuries. WisdomTree's U.S. Conservative Growth Model Portfolio is an option for higher quality income with equity exposure.

News for WisdomTree US Short Term Corporate Bond Fund ETF (SFIG)