“WETF has underperformed amid rising concerns about ETF price competition, but we view the company as insulated, differentiated, and positioned to gain share in an attractive niche,” Goldman analysts said, according to a Benzinga report. “We see the risk/reward as attractive given an anticipated AuM growth of +30% over the next three years, with sustainable fee rates yielding margin expansion and 60% earnings growth. Downside is buffered by a potential takeout given the firm’s scarcity value as an ETF innovator with exemptive relief.”
WisdomTree’s Steinberg says Vanguard’s benchmark switch means indices are being scrutinized. [Video: WisdomTree on Dividend ETFs]
“We think it’s very positive for WisdomTree that people are looking under the hood at the underlying indexes, at the exposures that they are getting,” the CEO said during the earnings call. “Also a positive, the attention that aggressive pricing is getting from the media, from analysts, from the financial advisors, will help expand the ETF pie dramatically.”
The ETF fee war is putting pressure on firms that manage plain-vanilla index funds, he added.
“But I think the bigger story is, what does it mean for the traditional asset managers whose products get less and less competitive every day? I think it’s all very, very positive, at net-net of it all, and we are well-positioned for this trend,” Steinberg predicted.
Saibus Research analysts note that WisdomTree focuses on active ETFs and fundamentally weighted indices rather than standard benchmarks like the S&P 500.
“We like the product positioning of the company since it offers a more dynamic alternative to traditional ETFs and at a lower cost than typical active mutual funds,” they said in a note.