Q3 2022: WisdomTree’s Enhanced Brand Showcases a Holistic Opportunity that is More than Just Investments
October 28, 2022
A week ago, WisdomTree announced both a change in its corporate name from ‘WisdomTree Investments, Inc.’ to simply ‘WisdomTree, Inc.’ and a change in its ticker symbol to ‘WT’ from ‘WETF’ to become effective on November 7, 2022. The questions I’ve been fielding over the past several days are “why change?” and “why now?”
In dropping ‘Investments’ from our name and dropping ‘ETF’ from our ticker, we are reflecting our expanded mission, showcasing that our business today embodies much more than investments. WisdomTree has significant opportunities ahead in both the exchange-traded funds (ETFs), models and advisor solutions business and as an early mover in digital assets and blockchain-enabled financial services. This brand enhancement mirrors this more expansive nature, a nod to WisdomTree’s history of innovation while also demonstrating a natural evolution of our company.
On our Q3 earnings call this morning, Jarrett, Bryan and I had an opportunity to unpack our successes and achievements in organic ETF growth, models, operating leverage, digital assets and blockchain-enabled financial products and services. As in prior quarters, I wanted to take a moment to reflect on our successes and our vision for the future in greater detail with you, our clients, our partners, our stockholders and our broader network.
WisdomTree’s robust organic growth demonstrates the company is poised for ongoing success. We are in the midst of our 9th consecutive quarter of net inflows and are growing organically at a strong 14% annualized rate as a firm. While we’ve had great success growing our U.S. Floating Rate Treasury Fund (USFR) to over $11 billion in assets under management (AUM), our total inflow profile is both broad and deep. In fact, year-to-date, WisdomTree has gathered net inflows in 6 of our 8 major product categories, including U.S. Equity, which is inflowing at a 13% annualized rate so far this year. Simply put, our AUM has never been so well diversified and product performance and positioning have set the firm up well to continue on this growth trajectory.
Expanding both the number of managed model portfolio partners and the number of models on partner platforms. Our two-fold models strategy is focused on partner platforms like Merrill, Morgan Stanley and others, as well as being an outsourced solution for smaller RIAs and independent broker-dealers that makes model portfolios easy to implement and trade. Once you win advisor mindshare, model flows are recurring in nature and stackable on top of our current inflow profile. I am amazed at the success we’ve had so far and am thrilled for WisdomTree to continue expanding both the number of model partners as well as the number of models on partner platforms.
SEC approval of our first blockchain-enabled fund is yet another digital asset milestone. WisdomTree remains laser focused on providing investors with the best product structure to access various asset classes. Today that’s ETFs, but we believe that blockchain-enabled funds and tokenized exposures are tomorrow’s best structure. In addition to our already minted gold and U.S. dollar tokens, we recently achieved a key milestone with SEC approval of our WisdomTree Short-Term Treasury Digital Fund (WTSY) and are hard at work building out a broad fund suite leveraging blockchain technology that includes recent filings for several fixed income funds as well as equity-focused strategies. These are the first bricks in the foundation that position us as an industry leader not only in blockchain-enabled products and digital assets, but also through WisdomTree Prime™ as an early mover in blockchain-enabled financial services, where spending, saving and investing are merged.
Solid operating leverage makes WisdomTree a top- and bottom-line growth story. We have built a global exchange-traded products (ETPs) and models business that is extremely scalable and delivers robust incremental margins that are more than 50%, and our digital assets initiative will not have a significant incremental impact on cost vs. 2022 levels. This means, as markets normalize, WisdomTree will be the only asset manager with a margin improvement story, an inflow story and a nascent digital assets story.
All in all, we are executing and delivering outstanding results in all areas under our control while sitting on the precipice of a broad rollout of digital assets and WisdomTree Prime early next year. I am very excited about where WisdomTree is headed, and I cannot wait to share our ongoing successes in future quarters.