1. How Do ETFs Fit into investment portfolios?
ETFs IN CLIENT PORTFOLIOS
How Do ETFs Fit into investment portfolios?
wisdomtree
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2. FOR INSTITUTIONAL INVESTOR USE ONLY
Disclaimer
This document is issued by WisdomTree Europe Ltd is an appointed representative of Mirabella Financial Services LLP which is authorised and regulated by the Financial Conduct Authority.
The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. An investment in ETPs is dependent on the performance of the underlying index, less costs, but it is not expected to match that performance precisely. ETPs involve numerous risks including among others, general market risks relating to the relevant underlying index, credit risks on the provider of index swaps utilised in the ETP, exchange rate risks, interest rate risks, inflationary risks, liquidity risks and legal and regulatory risks.
ETPs offering daily leveraged or daily short exposures (“Leveraged ETPs”) are products which feature specific risks that prospective investors should understand before investing in them. Higher volatility of the underlying indices and holding periods longer than a day may have an adverse impact on the performance of Leveraged ETPs. As such, Leveraged ETPs are intended for financially sophisticated investors who wish to take a short term view on the underlying indices. Investors should refer to the section entitled "Risk Factors" and “Economic Overview of the ETP Securities” in the Prospectus for further details of these and other risks associated with an investment in Leveraged ETPs and consult their financial advisors as needed. Within the United Kingdom, this document is only made available to professional clients and eligible counterparties as defined by the FCA. Under no circumstances should this document be forwarded to anyone in the United Kingdom who is not a professional client or eligible counterparty as defined by the FCA. This marketing information is intended for professional clients & sophisticated investors (as defined in the glossary of the FCA Handbook) only.
This marketing information is derived from information generally available to the public from sources believed to be reliable although WisdomTree Europe Ltd does not warrant the accuracy or completeness of such information. All registered trademarks referred to herein have been licensed for use. None of the products discussed above are sponsored, endorsed, sold or promoted by any registered trademark owner and such owners make no representation or warranty regarding the advisability on dealing in any of the ETPs.
FOR INSTITUTIONAL INVESTOR USE ONLY

3. Why consider ETFs in portfolios
Lower Costs
Diversification
Asset Allocation
Access same strategies as mutual funds
Transparency
Sources: WisdomTree Europe, Morningstar. Data as at 31 May 2016.
Past performance is not indicative of future returns.
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4. Average Costs comparison
Average Costs comparison
The average active fund charges at least twice as much in annual management fees as passive funds.
Average Annual Management Fee Comparison (%)
Exposure
Passive (Lowest)
Active
UK Large-Cap Equity
0.27 (0.07)
0.82
UK Mid-Cap Equity
0.38 (0.10)
0.80
UK Small-Cap Equity
0.58 (0.58)
0.99
US Large-Cap Equity
0.32 (0.05)
1.05
Europe Large-Cap Equity
0.35 (0.05)
1.16
Global Emerging Markets Equity
0.61 (0.20)
1.26
Sources: WisdomTree Europe, Morningstar.
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5. Importance of minimising costs
Importance of minimising costs
High expenses can erode investment returns and depress portfolio growth over time.
Average Active (High Expense) Portfolio
(0.90% Annual TER, 7% Annualised Return)
Average Passive (Low Expense) Portfolio
(0.25% Annual TER, 7% Annualised Return)
Sources: WisdomTree. Returns are hypothetical and do not represent actual investment returns. Returns above assume a 7% constant rate of return. Past performance is not indicative of future returns.
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6. ETF portfolios in practice
ETF portfolios in practice
Performance Overview
Time Period
Portfolio
Annual Return (%)
Standard Deviation (%)
Sharpe Ratio
1 Year
Passive
21.3
8.4
2.56
Active
19.5
7.7
2.65
3 Year
11.9
7.4
1.01
11.1
7.1
0.93
5 Year
10.1
6.7
1.03
9.4
6.5
0.94
10 Years
7.3
8.7
0.13
6.6
8.5
0.06
Sources: WisdomTree, Morningstar. Data from 30 April 2007 to 30 April Past performance is not indicative of future returns.
Returns are hypothetical and do not represent actual returns on investments.
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7. Diversification Active Exposure www.etf-forum.co.uk
ETFs offer cost-effective exposure to meeting diversification/asset allocation requirements.
A fully diversified portfolio can involve using ETFs as part of a core or satellite approach.
US Equity ETF
Active Exposure
Emerging markets equity ETF
Broad Commodity ETF
US Equity ETF
Europe Equity ETF
Emerging Markets Equity ETF
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8. The evolving world of passives
The evolving world of passives
BETA
ALPHA
SMART BETA STRATEGIES
Rules-Based
Market Cap Weighted
Representative Of Asset Class
Measures Average Return of All Stocks
Captures Beta
Rules-Based
Non Market-Cap Weighted
Quantitative
Seeks to Capture Return Premia Through Selection/Weighting & Rebalancing
Seeks to Create Passive Alpha
Active Stock Picking
Stock Selection Risk
Human Judgment
Seeks to Create Alpha
Passive
ETFs
Active
Mutual Funds
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9. SMART BETA STRATEGIES in practice
SMART BETA STRATEGIES in practice
Smart beta strategies: Exposure to an equity market seeking to generate higher returns, lower risk or both by weighting by measures other than market capitalisation
Smart beta strategies may emphasise (or de-emphasise) exposures to certain factors – like sensitivity to the market, small cap vs. large cap companies, value vs. growth styles or momentum - that have the potential to lead to differentiated returns
Types of smart beta strategies:
Equal-weighting
Fundamentally-weighted: dividends, earnings, revenue, multi-factor
“Risk Premium”- based: Access Return Premia of Beta, Size, Value, Momentum, Quality
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10. ETF Portfolios in action Accessing Income
ETF Portfolios in action Accessing Income
Global Equity Income Portfolio
Exposure
Portfolio Weight (%)
TER
(%)
Dividend Yield
Europe Equity Income ETF 30
0.29
3.4
US Equity Income ETF
2.8
EM Equity Income ETF 10
0.46
3.0
Europe Small Cap Dividend ETF
0.38
2.6
Japan Dividend Equity ETF
0.45
1.6
US Small Cap Dividend ETF
2.4
100
0.34
Sources: WisdomTree, Morningstar. Data as of 30 April 2017.
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11. ETF Portfolios in Action: Accessing income
ETF Portfolios in Action: Accessing income
Performance Overview
Time Period
Portfolio
Annual Return (%)
Standard Deviation (%)
Sharpe Ratio
1 Year
Passive
27.9
10.2
2.2
Active
24.4
9.8
2.0
3 Year
13.1
9.6
0.74
11.8
9.3
0.67
5 Year
14.7
9.9
0.99
11.9
9.4
0.82
Common Inception
10.8
15.1
0.31
9.1
0.22
Sources: WisdomTree Europe, Bloomberg. Data from 30 June 2008 to 30 April Past performance is not indicative of future returns.
Returns are hypothetical and do not represent returns of actual investments.
FOR INSTITUTIONAL INVESTOR USE ONLY

12. Combining passives with actives
Combining passives with actives
ETFs
Low cost Market risk Market returns
Combined Active/Passive Portfolio
Best of both
Active Mutual Fund
Higher cost Stock selection risk Potential for above-market returns
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13. Combined Portfolios in action: Accessing Quality
Combined Portfolios in action: Accessing Quality
Blend Portfolio: Active and Passive Exposures
Passive Portfolio: Market Cap ETFs Only
Exposure
Portfolio Weight (%)
TER
(%)
US Quality ETF 40
0.29
Eurozone Quality ETF 30
UK Active Fund 20
0.82
Japan Active Fund 10
1.25
100
0.51
Exposure
Portfolio Weight (%)
TER
(%)
US market-cap ETF 40
0.07
Eurozone market-cap ETF 30
0.33
UK market-cap ETF 20
Japan market-cap ETF 10
0.59
100
0.20
Sources: WisdomTree, Morningstar. Data as of 30 April 2017.
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14. Combined Portfolios in Action: Accessing Quality
Combined Portfolios in Action: Accessing Quality
Performance Overview
Time Period
Portfolio
Annual Return (%)
Standard Deviation (%)
Sharpe Ratio
1 Year
Blend
31.0
8.1
3.2
Market
29.2
8.9
2.6
Active
27.8
7.9
3 Year
16.8
9.7
1.1
14.3
0.9
13.5
9.3
0.8
5 Year
16.2
1.2
14.8
9.8
1.0
10 Years
10.3
13.6
0.3
7.3
14.5
0.1
14.4
Sources: WisdomTree Europe, Bloomberg. Data from 30 April 2007 to 30 April Past performance is not indicative of future returns.
Returns are hypothetical and do not represent returns of actual investments.
FOR INSTITUTIONAL INVESTOR USE ONLY

15. FOR INSTITUTIONAL INVESTOR USE ONLY
Summary
The average active fund charges at least twice as much in annual management fees as ETFs
ETFs can be used construct diversified portfolios or meet asset allocation needs
ETFs can complement existing active exposure as part of a core or satellite approach
FOR INSTITUTIONAL INVESTOR USE ONLY

16. FOR INSTITUTIONAL INVESTOR USE ONLY
Disclaimer
This document is issued by WisdomTree Europe Ltd is an appointed representative of Mirabella Financial Services LLP which is authorised and regulated by the Financial Conduct Authority.
The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. An investment in ETPs is dependent on the performance of the underlying index, less costs, but it is not expected to match that performance precisely. ETPs involve numerous risks including among others, general market risks relating to the relevant underlying index, credit risks on the provider of index swaps utilised in the ETP, exchange rate risks, interest rate risks, inflationary risks, liquidity risks and legal and regulatory risks.
ETPs offering daily leveraged or daily short exposures (“Leveraged ETPs”) are products which feature specific risks that prospective investors should understand before investing in them. Higher volatility of the underlying indices and holding periods longer than a day may have an adverse impact on the performance of Leveraged ETPs. As such, Leveraged ETPs are intended for financially sophisticated investors who wish to take a short term view on the underlying indices. Investors should refer to the section entitled "Risk Factors" and “Economic Overview of the ETP Securities” in the Prospectus for further details of these and other risks associated with an investment in Leveraged ETPs and consult their financial advisors as needed. Within the United Kingdom, this document is only made available to professional clients and eligible counterparties as defined by the FCA. Under no circumstances should this document be forwarded to anyone in the United Kingdom who is not a professional client or eligible counterparty as defined by the FCA. This marketing information is intended for professional clients & sophisticated investors (as defined in the glossary of the FCA Handbook) only.
This marketing information is derived from information generally available to the public from sources believed to be reliable although WisdomTree Europe Ltd does not warrant the accuracy or completeness of such information. All registered trademarks referred to herein have been licensed for use. None of the products discussed above are sponsored, endorsed, sold or promoted by any registered trademark owner and such owners make no representation or warranty regarding the advisability on dealing in any of the ETPs.
FOR INSTITUTIONAL INVESTOR USE ONLY