Morningstar Advisor - August/September 2011 - (Page 21)

Exchange-Traded Fund: WisdomTree Emerging Markets Equity Inc DEM Morningstar Category Diversified Emerging Markets Monthly Premium/Discount Total Assets $1.8 billion Expense Ratio 0.63% Avg Daily Volume 304,709 3yr annualized returns (6/11) 10.5% Yield 3.5% 3 0 –3 07/ 01/ 07/ 01/ 07/ 01/ 07/ 01/ 07 08 08 09 09 10 10 11 WisdomTree Emerging Markets Equity Income DEM is an attractive alternative to a marketcap-weighted emerging-markets ETF. DEM comprises about 300 of the highest-dividendyielding emerging-markets stocks, which are then weighted by annual cash dividends paid. This strategy has resulted in significantly better risk-adjusted returns when compared with the market-cap-weighted MSCI Emerging Markets Index (the underlying index for iShares MSCI Emerging Markets EEM and Vanguard MSCI Emerging Markets VWO)—the three-year Sharpe ratios for DEM and the MSCI Index were 0.50 and 0.25, respectively. Part of DEM’s outperformance has been driven by its dividend yield, which is currently about double that of EEM and VWO. We also note that many emerging-markets large-cap stocks are partially government-owned, and at times, these entities may put political goals ahead of the interests of minority shareholders, which can weigh on share prices. Relative to VWO and EEM, DEM has a lower exposure to these 53 52 types of companies. Patricia Oey Hindsight: June/July 2010 Our picks fared reasonably well for the most part in a stock market environment that started out with a worrisome decline but then saw stock prices charge upward and smooth out. A separate account run by a team from FPA in the same small/mid-value style as FPA Capital FPPTX handily beat its Russell 2500 Index benchmark as well as the mid-value category Pick Type 51 50 49 48 47 46 45 11/1/1011/26/1012/23/101/20/112/11/11 11/2/1011/29/1012/27/101/21/112/14/11 11/3/1011/30/1012/28/101/24/112/15/11 11/4/10 12/1/10 12/29/101/25/112/16/11 11/5/10 12/2/10 12/30/101/26/112/17/11 11/8/10 12/3/10 12/31/101/27/112/18/11 11/10/1012/7/10 1/3/11 1/28/112/22/11 11/9/10 12/6/10 1/4/11 1/31/112/23/11 11/11/1012/8/10 1/5/11 2/1/11 2/24/11 11/12/1012/10/10 1/6/11 2/2/11 2/25/11 11/15/1012/13/10 1/10/11 2/3/11 2/28/11 11/16/1012/14/10 1/7/11 2/4/11 3/1/11 11/17/1012/15/101/11/11 2/7/11 11/18/1012/16/101/12/11 2/8/11 11/19/1012/17/101/13/11 2/10/11 11/22/1012/20/101/14/11 2/9/11 11/23/1012/21/101/18/11 11/24/1012/22/101/19/11 12/9/10 norm—despite a hefty 30% stake in cash— thanks in part to a bet on the energy sector, which performed well over the whole of the period. Not coincidentally, our stock pick, oil behemoth ExxonMobil XOM, also posted a solid peer-beating gain. And while the emphasis of fund pick Aston/Montag & Caldwell Growth MCGFX on “quality” growth Cum Return to Date (%) Back Then, We Said ... stocks kept it modestly behind its Russell 1000 Growth Index benchmark, the fund still turned in a fine absolute gain. The big misfire was iPath S&P 500 VIX Short-Term Futures VXX. That exchange-traded note generally does well when300000 spikes, but volatility has volatility dropped sharply, and the price of the ETN has 200000 steeply declined, too. Greg Carlson Now, We Say ... 100000 ExxonMobil XOM iPath S&P 500 VIX Short-Tm Futures ETN VXX Aston/Montag Caldwell Growth N MCGFX FPA Small/Mid-Cap Absolute Value S&P 500 TR Russell 1000 Growth TR Russell 2500 TR S ETF MF SA Index Index Index 37.94 –81.99 19.47 36.61 23.85 27.57 29.34 “Inexpensive, will benefit from rising oil prices” “Guards against downturns, but carries risks” “Quality never goes out of style” “A good defense is the best offense” “A superior capital allocator and operator” 0 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 “Still provides insurance, but difficult to recommend now” “Take the long view” “Will likely remain a long-term winner” 0.2 11/1/1011/23/1012/21/101/19/112/10/11 11/2/1011/24/1012/22/101/20/112/11/11 11/3/1011/26/1012/23/101/21/112/14/11 11/4/1011/29/1012/27/101/24/112/15/11 11/5/1011/30/1012/28/101/25/112/16/11 11/8/1012/1/10 12/29/101/26/112/17/11 11/9/1012/2/10 12/30/101/27/112/18/11 11/10/1012/8/1012/31/101/28/112/22/1 11/11/1012/9/101/3/11 1/31/112/23/1 11/12/1012/10/101/7/11 2/1/11 2/24/1 11/15/1012/13/101/10/112/2/11 2/25/ 11/16/1012/14/101/11/112/3/11 2/28 11/17/1012/15/101/12/112/4/11 3/1/ 11/18/1012/16/101/13/112/7/11 11/19/1012/17/101/14/112/8/11 11/22/1012/20/101/18/112/9/11 12/3/10 1/4/11 12/6/10 1/5/11 12/7/10 1/6/11 0.1 The June/July 2010 issue was mailed to subscribers in June 2010. Return data is from June 1, 2010, through June 1, 2011. Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 MorningstarAdvisor.com 21 http://www.MorningstarAdvisor.com

Table of Contents for the Digital Edition of Morningstar Advisor - August/September 2011

Morningstar Advisor - August/September 2011
Contents
Contributors
Letter From the Editor
Simplicity and Design Matter
Do You Use ETFs Strategically or Tactically?
The Institutional Way
How to Analyze an ETF
Eyeing ETFs’ Next Chapter
Small-Cap/Large-Cap Flip-Flop?
Four Picks for the Present
Investment Briefs
Morningstar Investment Conference
Pitfalls of Peer Groups
A REIT Recovery, With a Catch
Turning Fund Distribution on Its Head
Here Come ETF Managed Portfolios
Circle These Picks Amid the Crop of New ETFs
ETF Analyst Favorites
Beware, the Accidental Portfolio Manager
It’s the Destination, Not the Vehicle
New Growth, Rooted in Experience
Better Ways to Look at ETFs
How to Better Manage Your Clients’ Future(s)
More Bargain Than Bubble
Cheap, Local, and On a Roll
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
First-Quarter Assets Hit an All-Time High
You Say You Want a Revolution?

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