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Methodology

The WisdomTree Siegel Strategic Value Index™ is designed to systematically leverage proven investment strategies with the aim to provide excess returns through volatility controls.

Value Investing

Based on the latest value investing research by Professor Jeremy Siegel, the Index seeks to systematically identify undervalued U.S. market sectors.

Company Valuation

As defined by Professor Siegel, rather than using traditional valuation metrics like Book Value, or Price-to-Earnings Ratios, the Index focuses on the use of Operating Earnings and Total Enterprise Value as more reliable measures of valuation.

Trend Analysis

The Index attempts to use Trend Analysis to predict future market movements based on historical data in order to capitalize on momentum when the markets are moving higher and reduce exposure when markets are declining.

Risk Management

The Index utilizes a Risk Management Strategy which enables a shift to a more conservative allocation when equity markets become volatile in an effort to reduce the impact of market declines.

An Alternative Approach to Value Investing
An Alternative Approach to Value Investing

A new way to look at time-tested practices

As opposed to using traditional valuation metrics like Book Value or Price-to-Earnings, the Index bases its investment approach on the ratio of Operating Earnings and Total Enterprise Value as more reliable measures of valuation.

Valuation based on Operating Earnings avoids changes in generally accepted accounting principles (GAAP) and one-time events that do not impact the longer-term value of firms.
By using Operating Earnings and Total Enterprise Value (TEV), rather than Market Capitalization on Earnings (or Price-to-Earnings Ratio (P/E Ratio)), this formula creates more accurate comparisons across companies with different capital structures.
The methodology also leverages Professor Siegel’s research on Aggregation Bias, which addresses cases where a few companies with very large losses can result in an artificially high P/E ratio at an aggregate level.