WisdomTree Launches U.S. MidCap Quality Growth (QMID) and U.S. SmallCap Quality Growth (QSML) Funds

WisdomTree, Inc. (NYSE: WT), a global financial innovator, announced today the launch of the U.S. MidCap Quality Growth Fund (QMID) and U.S. SmallCap Quality Growth Fund (QSML) on the NASDAQ. QMID and QSML seek to track the price and yield performance, before fees and expenses, of the WisdomTree U.S. MidCap Quality Growth Index¹ and WisdomTree U.S. SmallCap Quality Growth Index², respectively. Both funds have expense ratios of 0.38%.

QMID and QSML aim to identify stocks that have both quality and growth characteristics to avoid having to make sacrifices on either factor. Higher operating profitability (higher quality) has outpaced lower quality over time. That outperformance has been most pronounced in the smaller capitalization segments of the market.

Among investors who allocate to quality, characterized by higher efficiency and profitability, many often think large-cap³ companies equal quality. However, high-profitability small-cap⁴ companies have outperformed high-profitability large-caps over the long-run. The performance spread⁵ between high-profitability and low-profitability companies is even greater within small-cap companies as opposed to large-cap companies.

According to Jeremy Schwartz, WisdomTree’s Global Chief Investment Officer, “The recent divergent and rather large spreads between major growth indexes makes it abundantly clear that having the right index screens and rebalancing process are critical for performance. Certain growth indexes removed the strongest technology and growth names ahead of the 2023 mega-cap tech rally due to momentum screens that ranked those stocks poorly at year-end 2022. Certain other small-cap growth indexes include as much as 40% of speculative, unprofitable companies that appear particularly vulnerable in today’s higher interest rate environment that makes capital raising to fund operations more difficult. By employing a process that focuses on large-, mid-, and small-cap stocks scoring highly on a combined feature set of robust quality (profitability ratios) and strong earnings and sales growth, we believe QMID and QSML are not just sound long-term factor strategies but a great combination for today’s macro landscape.”