WisdomTree Emerging Markets ex-State-Owned Enterprises Fund (XSOE)

ETF WisdomTree Emerging Markets ex-State-Owned Enterprises Fund (EXSG)

Profile:

Focus: The WisdomTree Emerging Markets ex-State-Owned Enterprises Fund (EXSG) is an exchange-traded fund (ETF) that invests in equity securities of companies in emerging market countries, excluding state-owned enterprises (SOEs). The fund offers investors exposure to a diversified portfolio of emerging market companies, while mitigating the risks associated with SOEs.

Asset Allocation: EXSG invests primarily in large- and mid-cap companies in emerging markets. The fund's top sectors include Financials, Information Technology, and Consumer Discretionary.

Investment Strategy: EXSG employs a passive investment strategy, tracking the WisdomTree Emerging Markets ex-State-Owned Enterprises Index. The index consists of companies that meet specific criteria, including size, liquidity, and free-float market capitalization.

Objective:

The primary investment objective of EXSG is to provide investors with long-term capital appreciation by investing in a diversified portfolio of emerging market equities, excluding SOEs.

Issuer:

WisdomTree Investments, Inc.

Reputation and Reliability: WisdomTree Investments is a well-respected and experienced asset management firm with a strong track record in the ETF industry. The company has over $85 billion in assets under management and is known for its innovative and transparent investment products.

Management: The ETF is managed by a team of experienced portfolio managers with deep expertise in emerging markets investing. The team uses a rigorous research and quantitative analysis process to select securities for the portfolio.

Market Share:

EXSG has a market share of approximately 2.5% in the Emerging Markets ex-State-Owned Enterprises ETF category.

Total Net Assets:

As of October 27, 2023, EXSG has total assets under management of approximately $650 million.

Moat:

EXSG offers several competitive advantages, including:

• Unique Focus: The fund's focus on excluding SOEs mitigates the risks associated with these companies, which can be subject to government interference and corruption.
• Passive Management: The passive investment strategy helps keep expenses low and allows investors to benefit from broad market exposure.
• Diversification: The fund provides investors with exposure to a wide range of emerging market companies across different sectors and countries.

Financial Performance:

Historical Performance: EXSG has delivered strong historical performance, outperforming its benchmark index in recent years. The fund has returned 14.3% year-to-date and 32.5% over the past year, compared to 8.5% and 27.2% for the MSCI Emerging Markets Index.

Benchmark Comparison: EXSG has consistently outperformed the MSCI Emerging Markets Index over the past three and five years, demonstrating the effectiveness of its investment strategy.

Growth Trajectory:

Emerging markets are expected to continue experiencing strong economic growth in the coming years, driving potential upside for EXSG. Additionally, the fund's focus on excluding SOEs positions it well to benefit from the increasing scrutiny and pressure on these companies.

Liquidity:

Average Trading Volume: EXSG has an average daily trading volume of over 500,000 shares, making it a highly liquid ETF.

Bid-Ask Spread: The bid-ask spread for EXSG is typically narrow, indicating low transaction costs.

Market Dynamics:

Several factors could affect the market environment for EXSG, including:

• Global Economic Growth: Strong global economic growth would benefit emerging markets and support the fund's performance.
• Interest Rate Policies: Rising interest rates in developed countries could put pressure on emerging market currencies and impact the fund's returns.
• Geopolitical Risks: Political instability and geopolitical tensions in emerging markets could increase volatility and negatively impact the fund's performance.

Competitors:

Key competitors of EXSG include:

• iShares MSCI Emerging Markets ex China ETF (EMXC)
• VanEck Vectors Emerging Markets ex-State Owned Enterprises ETF (EMIF)
• SPDR S&P Emerging Markets ex-China ETF (GXC)

Expense Ratio:

The expense ratio for EXSG is 0.25%.

Investment Approach and Strategy:

Strategy: EXSG tracks the WisdomTree Emerging Markets ex-State-Owned Enterprises Index.

Composition: The fund invests primarily in large- and mid-cap companies in emerging markets, excluding SOEs. The top holdings include Tencent Holdings, Samsung Electronics, and Alibaba Group Holding.

Key Points:

• Focus on Emerging Markets: Provides exposure to high-growth economies.
• Excludes State-Owned Enterprises: Mitigates risks associated with SOEs.
• Passive Management: Low expenses and broad market exposure.
• Strong Historical Performance: Outperformed benchmark index.
• High Liquidity: Easy to buy and sell shares.

Risks:

• Emerging Market Volatility: Emerging markets can be more volatile than developed markets.
• Currency Risk: Changes in exchange rates can impact the fund's returns.
• Country-Specific Risks: Political and economic instability in individual emerging markets can pose risks to the fund.

Who Should Consider Investing:

EXSG is suitable for investors who:

• Seek long-term capital appreciation.
• Are comfortable with emerging market volatility.
• Believe in the growth potential of emerging markets.
• Want exposure to emerging market equities excluding SOEs.

Fundamental Rating Based on AI:

7.5 out of 10

EXSG receives a strong rating based on its fundamentals. The fund benefits from a proven investment strategy, robust performance track record, competitive expense ratio, and high liquidity. Additionally, the fund's focus on excluding SOEs positions it well to navigate potential risks in emerging markets. However, investors should be aware of the elevated volatility associated with emerging markets and the potential impact of geopolitical events and economic uncertainties.

Resources and Disclaimers:

Sources:

• WisdomTree Investments website
• Morningstar
• Bloomberg

Disclaimer:

This analysis is for informational purposes only and should not be considered investment advice. The information provided does not constitute an offer to buy or sell any securities. Any investment decisions should be made with the assistance of a professional financial advisor and after conducting thorough due diligence.