WisdomTree has launched the WisdomTree US Efficient Core UCITS ETF (NTSX) aiming to provide capital-efficient alternative to the traditional 60/40 portfolio.
This ETF, with a total expense ratio of 0.20%, is designed to provide investors with exposure to 90% of large US company stocks and 60% of US Treasury futures. The asset manager launched the strategy in the US in 2018.
The ETF mainly puts 90% of its money into a diverse selection of the 500 largest US companies, following the asset manager’s ESG criteria. Additionally, it includes a 60% investment in US Treasury futures, using the remaining 10% of the fund as collateral for these futures.
The futures portfolio consists of an evenly distributed mix of five US Treasury futures contracts with different maturity periods, adjusted every three months.
The ETF tracks the price and yield performance – before fees and expenses – of the WisdomTree US Efficient Core UCITS Index.
The fund is currently listed on Börse Xetra, the German stock exchange, and Borsa Italiana, the Italian stock exchange. The fund will feature on the London Stock Exchange on 18 October 2023.
According to the asset manager, the product strategy is underpinned by a “modern portfolio theory”. Investors can use leverage to get the same level of risk as a portfolio fully invested in stocks, but with the improved risk-return balance of a 60/40 portfolio, it explained.
Pierre Debru, head of quantitative research & multi-asset solutions, WisdomTree, said: “The ETF may have similar volatility to a 100% equity allocation over market cycles, but research shows it can help reduce drawdowns and potentially provide higher risk-adjusted returns too. Additionally, it could replace a combination of stocks and bonds to create a more efficient portfolio that frees up space for allocations to other alternative strategies like broad commodities, gold, or crypto assets.”
Alexis Marinof, head of Europe, WisdomTree, added that the US efficient core ETF can help investors create optimal portfolio blends and magnify portfolio exposures through the same concept that drives their asset allocation.
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