The UK Equity Income UCITS ETF tracks a dividend-weighted index of 103 constituents and employs the same methodology that the firm has employed in the US for over nine years.
According to the firm, the UK Equity Income Index strategy comprises the highest 33% of UK domiciled companies, taken from the WisdomTree UK equity universe, ranked by dividend yield.
In order to ensure the index is diversified, the strategy has a 3% weighting cap for single stocks and a 25% sector cap. It also employs a fundamental weighting strategy that takes account of the absolute amount of dividends paid by companies.
Viktor Nossek, Director of Research at WisdomTree Europe said, the ETF has over 100 constituents and features a large cap bias with over 83% of the index comprised of stocks with market capitalisation greater than £10bn and close to 15% in mid-cap stocks.
“The capping of individual sector exposures at 25% creates a more balanced portfolio construction compared to other unconstrained strategies, providing risk control at different parts of the investment cycle. In addition, a historic dividend yield of 5.9% compares favourably to competing indices.”
The physically replicated index has a total expense ratio of 29 basis points and currently offers a dividend yield of 5.9%, which is based on the trailing 12-month measure of dividend yields.
