WisdomTree has launched WisdomTree Japan Small Cap Dividend Ucits ETF on the London Stock Exchange. The fund seeks to track the price and yield performance of the WisdomTree Japan SmallCap Dividend index and has a net expense ratio of 0.48%.
The investment case for Japanese small-cap companies lies in the fact that they are more locally oriented and provide greater exposure to the local economy’s endogenously driven growth cycle, and with strengthening domestic demand, the index’s constituents derive more than 80% of their weighted average revenue inside Japan1, compared with 57% for Japanese large-caps.
Rafi Aviav, WisdomTree head of Product Development in Europe, said, “The WisdomTree Japan SmallCap Dividend Ucits ETF taps into the Japanese domestic economy while offering exposure to the size and value factors, which have been the clear winners from a factor perspective in Japan in the past decade.”
“The index has a live track record of more than 10 years, through which it has outperformed its small-cap benchmark by 1.7% per annum and its large-cap benchmark by 3.4% per annum, while maintaining low correlations (around 0.56) with European and US markets, true to its domestic focus. It offers a unique way to access Japanese small-caps and it is particularly relevant in these times, when global free trade may be challenged,” he added.
The methodology incorporates index universe, where constituents must be listed on the Tokyo Stock Exchange and have paid at least $5m in gross cash dividend on shares of the common stocks in the prior annual cycle to annual reconstitution and they must have a market capitalization of at least $100m on screening date. Weighting is on the basis of cash dividends paid (dividend-per-share x number of shares outstanding). There is a cap of 2% to any single constituent and a cap of 25% to any single sector.