WisdomTree LargeCap Growth (ROI) is the newest ETF on the block and the first product to provide a Growth At A Reasonable Price (GARP) investment strategy in an ETF format. ROI began trading yesterday, December 4, bringing the number of ETFs currently listed in the U.S. to 848.
Capitalization-weighted approaches dominate the world of indexing. Early exchange-traded funds followed the same path, typically designed to track a passive index. Some index and ETF providers are attempting to change the status quo with alternative indexing approaches. WisdomTree uses fundamental indexes that employ dividend and earnings weighting methodologies.
ETFs based on concepts other than capitalization-weighting are good for investors. They provide access to other investment strategies and additional diversification. However, many investors still default to the capitalization-weighted funds, mainly due to familiarity. Alternatives from Rydex, RevenueShares, FTSE-RAFI, and WisdomTree have not yet gained the following of cap-weighted products.
The WisdomTree approach provides a value-tilt to the composition of its ETFs. With the introduction of WisdomTree LargeCap Growth (ROI), the firm is now applying a value-tilt to a growth universe. Many investors might recognize this as a GARP (growth at a reasonable price) approach.
The ETF world is currently overcrowded. To attract attention, new funds need to bring something truly unique to the market and the sponsor has to put some marketing dollars behind its product. WisdomTree LargeCap Growth (ROI) is a good concept, although that does not guarantee success in the current environment. Investors still need to be educated, and WisdomTree has its job cut out for it.