Two exchange-traded funds are leading New York-based ETF manager WisdomTree Investments Inc. to experience significant growth.
So far, WisdomTree's assets have grown to $53.1 billion as of March 13, up nearly 35% from Dec. 31. A large part of that recent growth is thanks to its Europe Hedged Equity Fund and Japan Hedged Equity Fund. As of March 10, the two ETFs combined brought in $10.5 billion in new assets this year.
The two fast-growing currency hedging strategies — which, combined, have $30.74 billion in assets, representing about 58% of total company AUM — are among WisdomTree's lineup of 70 ETFs.
“These are certainly exciting times for them now, given their hedged currency ETF and their Japanese vehicle. Both of them have exploded in terms of asset growth this year,” said Macrae Sykes, an analyst at Gabelli & Co. Inc., New York, who covers WisdomTree.
Mr. Sykes added: “(With) the stronger dollar and the backdrop of a more comfortable (European Central Bank), they're well-positioned to grab more growth.”
In January and February, WisdomTree experienced net inflows of $9.9 billion, said Jonathan Steinberg, president and CEO of WisdomTree. On March 9, the firm announced it surpassed $50 billion in assets under management.
WisdomTree is the fifth largest ETF manager in the U.S.
Surinder Thind, an equity analyst at Jefferies & Co., San Francisco, said the growth is due to WisdomTree putting these ETFs in place in advance of macroeconomic events making them popular.
“They weren't instant hits,” Mr. Thind noted. But management put these funds in place so that, when the dollar eventually did strengthen, WisdomTree would be ready, he said. The Europe fund's inception date is the end of 2009 and the Japan fund, mid-2006.
Mr. Steinberg told Pensions & Investments in a phone interview that he anticipates the firm will spend between $12 million and $16 million on growth initiatives in 2015. By comparison, earnings reports from the firm show WisdomTree allocated up to $9 million to strategic growth investments in 2014, $8 million in 2013 and $2.5 million in 2012.
“We have plans to launch eight to 10 new funds this year,” said Mr. Steinberg.
In addition to new funds, Mr. Steinberg noted the company also plans to “significantly expand” its sales staff in 2015.
Although he declined to disclose details on the new ETFs or number of sales positions the firm is looking to recruit, WisdomTree already has launched a WisdomTree Europe Hedged SmallCap Equity Fund this year. Also, its quarterly earnings report reveals new roles added to the company would include a head of sales and an expanded chief investment strategist position.
With the ETF industry managing $2.8 trillion in assets globally, Mr. Steinberg wants WisdomTree to be ready to accommodate investors' growing appetite for ETFs. He noted that over the past 10 years, ETFs had net inflows of $1.4 trillion in the U.S.
