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Is WisdomTree India Earnings ETF (EPI) a Strong ETF Right Now?

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Making its debut on 02/22/2008, smart beta exchange traded fund WisdomTree India Earnings ETF (EPI - Free Report) provides investors broad exposure to the Asia-Pacific (Emerging) ETFs category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

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.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

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

EPI is managed by Wisdomtree, and this fund has amassed over $851.16 million, which makes it one of the larger 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

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.

With one of the most expensive products in the space, this ETF has annual operating expenses of 0.84%.

It has a 12-month trailing dividend yield of 1.45%.

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.

Looking at individual holdings, Reliance Industries Ltd (RIL) accounts for about 8.01% of total assets, followed by Infosys Ltd and Housing Development Finance Co (HDFC).

EPI's top 10 holdings account for about 35.88% of its total assets under management.

Performance and Risk

The ETF has lost about -6.55% and was up about 9.63% so far this year and in the past one year (as of 05/09/2022), respectively. EPI has traded between $31.65 and $39.26 during this last 52-week period.

The fund has a beta of 0.75 and standard deviation of 27.26% for the trailing three-year period, which makes EPI a medium risk choice in this particular space. With about 474 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 - Free Report) tracks Nifty 50 Index and the iShares MSCI India ETF (INDA - Free Report) tracks MSCI India Total Return Index. IShares India 50 ETF has $617.62 million in assets, iShares MSCI India ETF has $5.15 billion. INDY has an expense ratio of 0.90% 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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