Research > ETFs > ETF / ETP Commentary > 

This Thriving Model Portfolio Boasts a Star-Studded ETF

  • Related Symbols
  • EPS
Multi-factor investing is suitable across a variety of market environments and is looking to prove itself again in 2021.Advisors can access a variety of multi-factor strategies under a single umbrella with the WisdomTree Multi-Factor Model Portfolio.“This model portfolio is designed for investors with a long-term horizon looking for exposure to a broad universe of U.S. equities primarily using factor focused ETFs. The selected ETFs provide certain factor tilts that have the potential to generate excess return relative to comparable cap-weighted benchmarks over longer-term holding periods. The strategies may use both WisdomTree and non-WisdomTree ETFs,” according to WisdomTree.The WisdomTree Earnings 500 Fund (EPS B+) is the largest component in this model portfolio.The EPS ETF's Winning StrategyEPS, a revered name among multi-factor ETFs, targets an earnings-weighted index that screens for positive cumulative earnings over the most recent four fiscal quarter period, and assigns weights to components to reflect the proportionate share of the aggregate learning’s each company generated, so those with greater earnings have larger weights. That gives the fund value and quality tilts.“Rather than pursue an array of factors, EPS follows the profits. Firms must post positive cumulative earnings over the trailing four quarters at each annual reconstitution to be eligible for entry into this portfolio,” writes Morningstar analyst Ryan Jackson. “The fund sweeps in the largest 500 U.S. stocks that check this box and sums up all of their earnings. Dividing each stock’s earnings by the collective earnings of all stocks in the portfolio yields their portfolio weighting.”Importantly, EPS tilts away from high P/E ratio stocks, which are usually growth names and often vulnerable when volatility spikes.While it’s not a cap-weighted fund, EPS does the check the boxes of a core domestic large cap equity holding because it has a deep roster and is cost-effective, with an annual fee of 0.08% per year, or $8 on a $10,000 investment.“How the fund channels value is not as direct. While earnings and stock prices tend to be highly correlated, they are not the same,” adds Jackson. “This fund breaks the link between stocks’ market caps and their portfolio weights by emphasizing firms that are underpriced relative to their profits. When this fund rebalances each December, it mechanically overweights firms whose prices have declined relative to their earnings.”For more on how to implement model portfolios, visit our Model Portfolio Channel.

Performance data shown is past performance and is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. Yield and return will vary, therefore you have a gain or loss when you sell your shares. For standard quarterly performance, go to the fund's Snapshot page by clicking on the ETF/ETP's symbol.

ETFs may trade at a premium or discount to their NAV and are subject to the market fluctuations of their underlying investments.

For iShares ETFs, Fidelity receives compensation from the ETF sponsor and/or its affiliates in connection with an exclusive long-term marketing program that includes promotion of iShares ETFs and inclusion of iShares funds in certain FBS platforms and investment programs. Please note, this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral. Additional information about the sources, amounts, and terms of compensation can be found in the ETF's prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice. BlackRock and iShares are registered trademarks of BlackRock, Inc. and its affiliates.

FBS receives compensation from the fund's advisor or its affiliates in connection with a marketing program that includes the promotion of this security and other ETFs to customers ("Marketing Program"). The Marketing Program creates incentives for FBS to encourage the purchase of certain ETFs. Additional information about the sources, amounts, and terms of compensation is in the ETF's prospectus and related documents. Please note that this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral.

News, commentary (including "Related Symbols") and events are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.

Any data, charts and other information provided on this page are intended to help self-directed investors evaluate exchange traded products (ETPs), including, but limited to exchange traded funds (ETFs) and exchange traded notes (ETNs). Criteria and inputs entered, including the choice to make ETP comparisons, are at the sole discretion of the user and are solely for the convenience of the user. Analyst opinions, ratings and reports are provided by third-parties unaffiliated with Fidelity. All information supplied or obtained from this page is for informational purposes only and should not be considered investment advice or guidance, an offer of or a solicitation of an offer to buy or sell a particular security, or a recommendation or endorsement by Fidelity of any security or investment strategy. Fidelity does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating ETPs. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use. Determine which securities are right for you based on your investment objectives, risk tolerance, financial situation and other individual factors and re-evaluate them on a periodic basis.

Before investing in any exchange traded product, you should consider its investment objective, risks, charges and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.