WisdomTree Investments (NASDAQ:WETF)

CAPS Rating: 5 out of 5

Recs

1
Player Avatar ROEoutshinesGOLD (99.21) Submitted: 1/3/2013 3:41:34 PM : Outperform Start Price: $6.73 WETF Score: +39.41

caps.fool.com/player/trackgoldmansach.aspx
+Earnings guidance = A+

Business Summary:
WisdomTree Investments, Inc., is an ETF sponsor in the United States. The Company's family of ETFs includes both fundamentally weighted funds that track its own indexes, and actively managed funds. It distribute its ETFs through all major channels within the asset management industry, including brokerage firms, registered investment advisors, institutional investors, private wealth managers and discount brokers. The Company focuses on creating innovative and thoughtful ETFs for investors. Its index-based funds employ a fundamental weighted investment methodology, which weights securities on the basis of factors such as dividends or earnings, whereas most other ETF indexes use a capitalization weighted methodology. In addition, it is one of a small number of ETF sponsors that have received the necessary exemptive relief from the SEC to offer actively managed ETFs, which are ETFs that are not based on a particular index but rather are actively managed with complete transparency into the ETF's portfolio on a daily basis. It competes directly with other ETF sponsors and mutual fund companies and indirectly against other investment management firms, insurance companies, banks, brokerage firms and other financial institutions that offer products that have similar features and investment objectives to those offered by the Company. The investment management industry is subject to extensive regulation and virtually all aspects of its business are subject to various federal and state laws and regulations.

*The followings excerpt, from the business summary above, highlights what appears to be a narrow Regulatory Moat:

..."it is one of a small number of ETF sponsors that have received the necessary exemptive relief from the SEC to offer actively managed ETFs, which are ETFs that are not based on a particular index but rather are actively managed with complete transparency into the ETF's portfolio on a daily basis." ...

1) How many is: "a small number of ETF sponsors"?
2) Who are the other: ".. ETF sponsors that have received the necessary exemptive relief from the SEC ..."?
3) What advantage, if any, does WETF enjoy over other ETF sponsors with the same favorable treatment from the SEC?
4) What other Moat does WETF enjoy?

Report this Post 3 Replies
Member Avatar Mega (99.96) Submitted: 1/20/2013 3:35:55 PM
Recs: 2

Good questions.

1 & 2. At least 6 other large companies: T. Rowe Price, Fidelity, Franklin, Janus, Columbia and Legg Mason. According to this article the SEC's approval process took 2-3 years, but I imagine it will be easier for new entrants.

http://www.etftrends.com/2013/01/several-fund-firms-eyeing-active-etfs/

3. None as far as I know.

4. They're well known for fundamental indexing - weighting by earnings and dividends instead of market cap. They may have some intellectual property keeping other asset managers from copying this approach. Their funds seem to have a reasonable performance record, keeping clients happy and attracting new clients. Sales and marketing is also a key moat for asset managers.

The business is pretty good but the valuation is too high in my opinion.

Member Avatar paek813 (99.61) Submitted: 1/24/2013 2:15:56 PM
Recs: 1

Thank you MegaShort. Your graciously generous answers are very accommodating. I need to find 10 more Fools like you.

Member Avatar ROEoutshinesGOLD (99.21) Submitted: 5/6/2013 12:22:26 PM
Recs: 0

fool.com/investing/general/2013/02/19/5-stocks-under-10-worth-buying-5.aspx

"It's hard to get excited about the mutual fund industry. Exchange-traded funds have exploded in popularity, giving investors and speculators alike the ability to buy into a basket of stocks that price continually throughout the trading day. With ETFs typically charging lower management fees than traditional mutual funds, many brokerage firms have expanded the number of ETFs that they offer without any brokerage commissions."

"WisdomTree is the only pure play in this booming investment niche. Assets under management have popped 50% over the past year to $18.3 billion. Capital appreciation and a whopping $4.7 billion in net inflows in 2012 have grown its asset base from $12.2 billion at the beginning of last year."

"Its emphasis on exotic offerings has helped set itself apart, highlighted by its WisdomTree Emerging Markets Equity Income vehicle that has exploded to $5.3 billion in assets."

"The stock isn't exactly cheap, but its heady growth and exclusivity as the only pure play in the ETF space make it one of the few financial services providers with ample room to run."

fool.com/investing/general/2013/02/19/5-stocks-under-10-worth-buying-5.aspx

Featured Broker Partners


Advertisement