“Based on information that came to our attention during the lawsuit, Research Affiliates can now acknowledge that WisdomTree’s fundamentally-weighted indexes and strategies were developed by WisdomTree independently of Research Affiliates,” Arnott said in the press release.
Invesco PowerShares manages several ETFs hitched to FTSE RAFI benchmarks, such as PowerShares FTSE RAFI US 1000 Portfolio (NYSEArca: PRF). RAFI stands for Research Affiliates Fundamental Index. ProShares sponsors ProShares RAFI Long/Short (NYSEArca: RALS).
“Historically, RAFI indices have generated significant outperformance over time by using measures of a company’s economic footprint and through its rebalancing process that shifts assets into the least-favored securities and out of the most-favored—and thus most expensive—securities,” Research Affiliates said in a 2011 press release announcing the patent infringement lawsuit against WisdomTree.
Both parties agree to respect each other’s intellectual property and patents, according to the joint statement released Thursday. WisdomTree said the settlement will not affect the current methodologies and fee schedules for its ETFs.
During a recent conference call, WisdomTree said it incurred net legal expenses of $219,000 in the third quarter related to patent litigation with Research Affiliates.