A smart beta exchange traded fund, the WisdomTree India Earnings ETF (EPI) debuted on 02/22/2008, and offers broad exposure to the Asia-Pacific (Emerging) ETFs category of the market.

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.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

The fund is managed by Wisdomtree. EPI has been able to amass assets over $4.01 billion, making it one of the largest ETFs in the Asia-Pacific (Emerging) ETFs. EPI, before fees and expenses, seeks to match the performance of the WisdomTree India Earnings Index.

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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

With one of the most expensive products in the space, this ETF has annual operating expenses of 0.87%.

The fund has a 12-month trailing dividend yield of 0%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Reliance Industries Ltd (RIL) accounts for about 7.29% of total assets, followed by Hdfc Bank Limited (HDFCB) and Icici Bank Ltd (ICICIBC).

EPI's top 10 holdings account for about 30.54% of its total assets under management.

Performance and Risk

The ETF has gained about 19.80% and is up about 38.72% so far this year and in the past one year (as of 08/21/2024), respectively. EPI has traded between $35.41 and $50.19 during this last 52-week period.

EPI has a beta of 0.81 and standard deviation of 16.66% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 479 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.

Franklin FTSE India ETF (FLIN) tracks FTSE INDIA CAPPED INDEX and the iShares MSCI India ETF (INDA) tracks MSCI India Total Return Index. Franklin FTSE India ETF has $1.69 billion in assets, iShares MSCI India ETF has $11.31 billion. FLIN has an expense ratio of 0.19% and INDA charges 0.65%.

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

Franklin FTSE India ETF (FLIN): ETF Research Reports

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