The exchange traded fund industry has been shaken up by ETF providers switching indices and by a race to the bottom on fees in a cost war.
However, WisdomTree (NasdaqGM: WETF) says it sees these important developments as an opportunity rather than a challenge.
“WisdomTree specifically was designed to address these exact market dynamics,” said CEO Jonathan Steinberg during the firm’s recent third-quarter earnings conference call. [WisdomTree Quarterly Profit More than Triples]
Specifically, indexing giant Vanguard has announced plans to transition to new benchmarks at its ETFs. Vanguard says the move will allow it to cut fees, while BlackRock (NYSE: BLK) and Charles Schwab (NYSE: SCHW) have also unveiled cost reductions at their ETF lineups.
Steinberg says WisdomTree isn’t feeling any pressure to lower fees and that the company can coexist with low-cost ETF providers such as Vanguard.
The reason is that WisdomTree’s ETFs are not designed to follow traditional indices that weight stocks by market capitalization. Instead, many of the firm’s ETFs track benchmarks designed by WisdomTree that weight stocks by fundamental factors such as dividends and earnings. [More ETF Firms Joining Self-Indexing Trend]
In early October, Goldman Sachs added WisdomTree shares to its conviction buy list.