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

Zacks Equity Research
·4-min read

Launched on 02/22/2008, the WisdomTree India Earnings ETF (EPI) is a smart beta exchange traded fund offering 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.

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

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

Because the fund has amassed over $3.48 billion, this makes it one of the largest ETFs in the Asia-Pacific (Emerging) ETFs. EPI is managed by Wisdomtree. Before fees and expenses, this particular fund 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

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

With one of the most expensive products in the space, this ETF has annual operating expenses of 0.85%.

It has a 12-month trailing dividend yield of 0.13%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. 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 8.19% of total assets, followed by Hdfc Bank Limited (HDFCB) and Icici Bank Ltd (ICICIBC).

Its top 10 holdings account for approximately 38.26% of EPI's total assets under management.

Performance and Risk

Year-to-date, the WisdomTree India Earnings ETF has added about 16.61% so far, and is up about 39.16% over the last 12 months (as of 06/17/2024). EPI has traded between $34.02 and $47.81 in this past 52-week period.

The fund has a beta of 0.78 and standard deviation of 16.56% for the trailing three-year period, which makes EPI a medium risk choice in this particular space. With about 477 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 $1.29 billion in assets, iShares MSCI India ETF has $11.11 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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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