Designed to provide broad exposure to the Asia-Pacific (Emerging) ETFs category of the market, the WisdomTree India Earnings ETF (EPI) is a smart beta exchange traded fund launched on 02/22/2008.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Wisdomtree. It has amassed assets over $970.37 million, making it one of the larger ETFs in the Asia-Pacific (Emerging) ETFs. EPI seeks to match the performance of the WisdomTree India Earnings Index before fees and expenses.
The WisdomTree India Earnings Index is a fundamentally weighted index that measures the performance of companies incorporated and traded in India that are profitable and that are eligible to be purchased by foreign investors as of the index measurement date. Weighted Index based on their earnings in their fiscal year prior to the Index measurement date adjusted for foreign investors.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.84%, making it one of the most expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.18%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Reliance Industries Ltd (RIL) accounts for about 8.14% of the fund's total assets, followed by Housing Development Finance Co (HDFC) and Infosys (NYSE:INFY) Ltd (INFO).
The top 10 holdings account for about 36.01% of total assets under management.
Performance and Risk
So far this year, EPI has gained about 0%, and is up roughly 26.36% in the last one year (as of 01/03/2022). During this past 52-week period, the fund has traded between $28.65 and $39.26.
EPI has a beta of 0.83 and standard deviation of 26.75% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 476 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree India Earnings ETF is a reasonable option for investors seeking to outperform the Asia-Pacific (Emerging) ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
IShares India 50 ETF (INDY) tracks Nifty 50 Index and the iShares MSCI India ETF (INDA) tracks MSCI India Total Return Index. IShares India 50 ETF has $681.26 million in assets, iShares MSCI India ETF has $5.91 billion. INDY has an expense ratio of 0.90% and INDA charges 0.69%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Asia-Pacific (Emerging) ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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WisdomTree India Earnings ETF (EPI): ETF Research Reports
iShares MSCI India ETF (INDA): ETF Research Reports
iShares India 50 ETF (INDY): ETF Research Reports
IHS Markit Ltd. (INFO): Free Stock Analysis Report
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