WisdomTree Investments, Inc. has announces the 10th anniversary of the launch of its first 20 equity ETFs on the New York Stock Exchange. WisdomTree listed its first ETFs in Europe in October 2014, and has recently opened an office in Japan and Canada….…
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A Decade of Excellence
Ten years ago in the summer of 2006, WisdomTree launched its first family of fundamentally weighted ETFs in the U.S., pioneering the concept of dividend-weighted ETFs through the listing of 20 funds in a single day. The Company’s 2006 launch was based on its original vision that weighting equity markets by dividends, rather than by market capitalisation, would represent a significant evolution in indexing.
WisdomTree sought to create new broad-based indices that adopted the best practices of index investing: broad representation, rules-based transparency and low turnover. At the same time, these indices were constructed to introduce a measure of valuation into index weights in order to address the potential drawbacks of traditional indices, which are vulnerable to bubbles over full market cycles. Rather than weighting each component based on its market value, WisdomTree’s broad-based dividend indices typically include all investable stocks that pay dividends and then weight them annually based on a measure of relative value: the cash dividends each company pays as a percentage of the total amount of cash dividends paid by all the companies in that market.
These equity indices would ultimately serve as the basis for WisdomTree’s successful ETF platform today.
WisdomTree’s Chief Investment Strategist, Luciano Siracusano, commented on the significance of WisdomTree’s ten-year track records: “Passive investing has undoubtedly served investors well over the past 30 years. Numerous studies confirm that, over time, the vast majority of actively managed mutual funds have failed to outperform comparable cap-weighted indices, after accounting for fees, expenses and transaction costs. The real time track records of our indices in the market underscore that there is in fact room for improvement beyond traditional indexing to achieve better risk adjusted returns”.
Leading ETF Industry Innovation
In addition to its groundbreaking Smart Beta ETFs, WisdomTree changed the competitive landscape through a novel, research-driven business model of self-indexing. By creating its own proprietary indices and operating as both index developer and ETF sponsor, WisdomTree creates its own investor-focused intellectual property and remains at the forefront of investment innovation today. WisdomTree has grown from its initial family of 20 products in 2006 to 99 funds listed in the U.S.; covering domestic, international and global equities, fixed income, currencies, commodities and alternative strategies. In Europe, the firm lists a total of 26 UCITS ETFs across the London Stock Exchange, Borsa Italiana, Deutsche Börse Xetra, SIX Swiss Exchange and Irish Stock Exchange. Most recently, the Company launched the WisdomTree US Quality Dividend Growth UCITS ETF (DGRA) and WisdomTree Global Quality Dividend Growth UCITS ETF (GGRA), and the WisdomTree Enhanced Commodity UCITS ETF – USD Acc on the London Stock Exchange and Borsa Italiana, and Deutsche Börse Xetra, respectively.
“Ten years ago, WisdomTree believed ETFs represented the future of asset management because of their investor-friendly characteristics; we introduced an important evolution in index construction through fundamental weighting and a novel business model of self-indexing which allowed WisdomTree to become one of the world’s leading ETF sponsors. Today, ETFs are in fact a global phenomenon poised to overtake traditional mutual fund assets over time, and alternative index weighting schemes under the Smart Beta moniker are becoming widely accepted by individual and institutional investors alike. Not only was WisdomTree’s early vision validated, our value proposition and competitive strategy positions us incredibly well for the next decade and beyond,” said WisdomTree CEO and President Jonathan Steinberg.
Mr. Steinberg added, “The future for both traditional Beta and Smart Beta ETFs across asset classes remains bright as more individuals, financial advisors and institutions embrace a structure which promotes transparency, liquidity and a level playing field in financial markets. Continued investment innovations like currency hedging and liquid alternatives, in addition to new regulations encouraging transparency of fees and advice, will further contribute to ETF industry growth in the U.S. and in fast-growing ETF markets around the world. As WisdomTree expands in new asset classes and geographic markets, we are still executing against our original business plan: to develop innovative, thoughtful, and differentiated ETFs which serve the needs of investors.”