Investors have a lot on their plate to start a complicated 2023, with conflicting narratives surrounding the Fed, growth, value, and a potential recession in the mix. Advisors and investors alike have much to consider and may want to consider how WisdomTree Investment’s head of Americas distribution, Joe Grogan, is communicating with investors and positioning the firm’s strategies amid such uncertainty. VettaFi chatted with the WisdomTree distro leader just before the Exchange ETF conference.
WisdomTree has been focused on leveraging its value-oriented approach so far in 2023, a year that began with a resurgence in value investing following last year’s broad market selloff. Large value ETFs have seen $3.5 billion in YTD net inflows according to YCharts, the 7th most across all categories, with small value ETFs returning 10.9% in that time.
To Grogan, advisors should know that WisdomTree doesn’t just have a value tilt, but also that the firm is serious about screening for quality.
“It’s important to us to let them know that you know the premise of what we do is really based around quality selection,” Grogan said. “Quality being a very big buzzword nowadays, it’s something that WisdomTree’s roots are in. It’s really how we select indexes, how we select our products, what we invest in, and typically just by the simple way in which we actually screen and invest, we identify the most quality-oriented organizations.”
Advisors have shared their desire for shelter from the storm with the firm, Grogan said while crediting his WisdomTree distro team, often leading to discussions about WisdomTree’s Floating Rate Treasury Fund (USFR). Tracking the Bloomberg U.S. Treasury Floating Rate Bond Index, the ETF charges 15 basis points and has added $1.6 billion over the last three months with the recent benefit of clipping around 4% in interest.
Other strategies that have been frequent topics from advisor outreach have included the firm’s WisdomTree U.S. Value Fund (WTV), which has outperformed its ETF Database Category Average and its Factset Segment Average over the last month with returns of 12.7% for a 12-basis point fee.
On top of value funds like WTV, European markets strategies like the WisdomTree Europe SmallCap Dividend Fund (DFE) have grown in popularity thanks to the breadth of dividend-paying firms available around the world. DFE itself received a $30 million buy Friday, he said.
WisdomTree rebalanced several of its dividend-yielding funds last month, meanwhile, which has resulted in adding several growthier names that hit the shop’s value screens.
“If you look at one of our real true value funds, WTV, which is our low-cost value fund we put out there, its top position right now is Meta (META),” the WisdomTree distro leader said. “So when you see Facebook in the top position in a value fund, it just shows you how far that has dropped and that fund right now is a top decile performer out of all value funds.”
Looking to help advisors, the firm has developed its Portfolio Advisor Growth Solutions service which is meant to help advisors with logistics, rebalancing, and more to help them design portfolios and focus on helping their clients plan, Grogan said.
“It’s a solution that we offer and it’s an end-to-end model solution for advisors that need to simplify, scale, and grow their business. We don’t charge advisory fees on top of it, it’s not all proprietary WisdomTree,” he said.
Looking ahead, the shop plans to continue to prioritize dividends, Grogan said, pointing to advice from Professor Jeremy Siegel, Senior Investment Strategy advisor at WisdomTree and Emeritus Professor of Finance at the Wharton School.
“Professor Siegel does still feel a little bullish about the market and where he says to be is to be in dividend performing securities… If the market comes down and you’re in a complete growth stock, it doesn’t pay a dividend, but its forward earnings are based on future interest rates, those are going to get hammered,” Grogan said.
“So why take that risk right now? Put a base in your portfolio into dividend-yielding securities, make sure it’s high quality, have a nice component in cash or a cash-yield security like USFR, and you can almost wait it out and pick and play when you should enter back into the market in a slower pace,” he added.
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