[This video uses animation to illustrate spoken content. The CIBC logo appears with the video title, “WisdomTree Siegel Strategic Value Index™]
The WisdomTree Siegel Strategic Value Index™ is an innovative quantitative investment strategy
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that leverages decades of experience and insight, leading index construction, and objective asset allocation processes
[The following appears simultaneously: WisdomTree Investments Inc., a picture of Jeremy Siegel, and CIBC Capital Markets.]
from three prominent industry leaders.
[A book, and a rectangle with the text “P/E“ appears.]
As opposed to using traditional valuation metrics like Book Value or Price to Earnings Ratios
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the Index bases its investment approach on the ratio of operating earnings and total enterprise value as more reliable measures of valuation.
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This approach avoids the potential for significant earnings swings due to changes in accounting principles;
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excludes one-time events that do not impact the longer-term value of firms;
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and helps to create more accurate comparisons across companies with different capital structures.
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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.
Here’s how it works:
[Text reads, “Evaluate.” Ten rectangles, each formed by small squares appear. One of the rectangles enlarges to the foreground.]
The Index evaluates 500 of the largest publicly traded U.S. companies by market cap, across 10 industry sectors, for fundamental factors including operating earnings and total enterprise value.
[Text reads, “Select.” Four rectangles transform into solid bars, while the others disappear.]
The Index selects the four best valued U.S. market sectors and invests quarterly.
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Each month, the selected market sectors are rebalanced to capture potential gains.
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The Index then seeks to provide excess returns through a unique set of proprietary volatility controls.
[Text reads, “Trend Analysis.” The magnifying glass remains, and a positive line chart appears. The line chart then becomes negative.]
Trend analysis leverages long- and short-term trends to capitalize on momentum when markets are moving higher and to reduce exposure when markets are declining.
[Text reads, “Risk Management Strategy.” The square graphic reappears. The square expands into a rectangle. Text in the square graphic reads, “Long: Equity Strategy” on the left, and “Short: Broad Equity Market Index” on the right.]
The Index also includes a risk management strategy that combines a 100% long equity strategy, made up of the selected equity market sectors, with a 100% short position in a broad equity market index, in an effort to hedge against market risk when the broad market is declining.
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These innovative mechanisms built into the Index construction seek to maximize value while minimizing downside risk across market conditions.
[A green positive arrow appears within the magnifying glass. The square graphic transforms into a rectangle divided into two areas, where the text reads, “Equity Strategy” on the left, and “Risk Management Strategy” on the right.]
When the trend analysis is positive, the Index is always in some combination of the equity strategy and risk management strategy to seek a balanced return.
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When the trend analysis is negative, the Index allocates all assets into the risk management strategy.
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When Index volatility is low, the Index allocates up to a maximum of 150% to the strategy;
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as Index volatility increases, a cash allocation is added to maintain the volatility target.
The end result?
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Whether it’s a bull market or a bear market,
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the Index automatically seeks exposure to equities within a predefined volatility target.
The WisdomTree Siegel Strategic Value Index™. Seeking excess returns through volatility controls.
[Text reads, “Learn more at wtsiegelindex.cibccm.com”]