THE WisdomTree BLOG
When your starting point is a 1.4% dividend yield, as is the case with the S&P 500 Growth Index, the group of stocks that makes up the basket had better have long-term dividend growth that performs like Seabiscuit, the super horse. No tripping out of the gate or getting bumped in the stretch. Everything must go perfectly.
At the risk of making a 34-year-old pop culture reference, growth stock fundamentals recall the question first posed by Wendy’s: “Where’s the beef?” As was the case in 1984, when war was declared on McDonald’s and Burger King, there appears to be a lot of “bun” in the U.S. growth stock story, but not a lot of “meat” in their valuations.
Does the “global trade war,” quotation marks intentional, spell doom? It depends on your silo. While the mass of investors focus on this issue, few are noting Chinese fiscal expansion or, for that matter, big trade deals being signed right now.
A measure of the relationship between active share and fees is the hurdle rate, the amount that active selections have to outperform to cover the MER. If you think about it, this is what really matters in picking a fund or ETF. How do you think about performance?
What investor in their right mind would use “haven” in the same sentence as “China?” We would, in the right context. China could be a haven, at least relative to other emerging markets, especially if the market’s focus shifts from trade wars to tax reform.