WisdomTree has launched its second efficient core ETF in Europe providing leveraged exposure to a traditional global 60/40 portfolio, ETF Stream can reveal.
The WisdomTree Global Efficient Core UCITS ETF (NTSG) is listed on the Deutsche Boerse and Borsa Italiana with a total expense ratio (TER) of 0.25%. The ETF will list on the London Stock Exchange tomorrow.
NTSG seeks to replicate the performance of a proprietary index, the WisdomTree Global Efficient Core index.
The index has a 90% allocation to global large cap companies which meet WisdomTree’s ESG criteria. The remaining 10% is used as cash collateral for a 60% futures exposure to US, German, UK and Japanese government bonds.
The result, in effect, is a 1.5x leveraged 60/40 portfolio.
The idea is rooted in portfolio theory. If investors allocate the capital freed up by using leverage to diversifiers and alternatives, they can achieve 60% equity and 40% fixed income exposures but with an improved Sharpe ratio.
Pierre Debru (pictured), head of quantitative research & multi-asset solutions at WisdomTree, said: “[NTSG] is intended to be a portfolio that maintains a high correlation to the market for possible equity upside, with potentially lower volatility and drawdowns through greater fixed income exposure, while also allowing for allocations to other diversifiers or alternative strategies, like broad commodities, gold or crypto assets.”
NTSG follows the launch of the WisdomTree US Efficient Core UCITS ETF (NTSX) last October, which has so far gathered $18m is assets, according to trackinsight data.
“Through this range of ETFs investors can make their capital work harder by enhancing the efficiency of core asset allocation while improving a portfolio’s risk-return profile,” added Alexis Marinof, head of Europe at WisdomTree.
WisdomTree recently merged its UK equity income ETF into its UK quality dividend growth ETF after the fund “failed to gather sufficient assets”.
