WisdomTree Investments, Inc. (NASDAQ:WETF) Q4 2014 Earnings Conference Call - Final Transcript

Feb 06, 2015 • 09:00 am ET


WisdomTree Investments, Inc. (NASDAQ:WETF) Q4 2014 Earnings Conference Call - Final Transcript


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Jonathan Lawrence Steinberg

Inflows, in 2014, the industry had inflows in the U.S. of $239 billion, an all-time record. For some context, the traditional mutual fund industry has had $300 billion and $400 billion of inflows in years past.On today's call, we will discuss some avenues of growth for the ETF industry and the plans WisdomTree has identified to capitalize on these opportunities. But before we get to the numbers in packets, let's be clear about WisdomTree's opportunity.It is so easy to be distracted by old debates like passive versus active or new terminology like smart beta and liquid alts.

The simple truth is the ETF structure is just that, a structure by which you can access all of these asset classes and strategies. But it is a structure with the characteristics central to a positive investing experience: transparency, liquidity, and tax efficiency, plus overall flexibility and convenience. It is a matter of fact, not opinion, that ETFs are superior to traditional investment products in these crucial respects.

So $2 trillion in assets and $200 billion plus in annual inflows is just the beginning.Transparent ETFs are competing with the heart and soul of asset management, and they are winning. Again for a perspective, over the past 10 years, the ETF industry in the U.S. has taken in $1.4 trillion in net inflows.With continued growth in existing funds and existing sales channels, plus the momentum we are gaining from new products, new sales channels and new geographies, I believe the next 10 year will be even stronger.

I expect the ETF industry to average at least $250 billion to $300 billion of inflows annually over the next 10 years. That translates into $2.5 trillion to $3 trillion in inflows over that timeframe. It is easy to imagine that in 10 years the U.S. ETF market having $5 trillion to $6 trillion in assets.It is against this backdrop that we are reaffirming our longer term goal of a $100 billion in AUM, as well as our 3% to 5% market share of inflow target. WisdomTree is an important proxy for the ETF industry and at the company level WisdomTree is also demonstrating exceptional growth.

In fact, in the fourth quarter and even more recently year-to-date, we are demonstrating industry leading growth.For WisdomTree's leadership team, the most important question is, what can we do to make sure we are positioned to maximize our growth potential at this point of company development and industry inflection? WisdomTree's CFO, Amit Muni, will discuss our growth.

Jonathan Lawrence Steinberg

across our currency hedged equity, U.S. equity, and bullish dollar ETFs. The positive market dynamics supporting these funds most notably are strong U.S. dollar and a depreciating euro have gained momentum throughout 2014 and carried into 2015.

HEDJ, our European hedged equity ETF has experienced significant strength with inflows of $5 billion last year; $2.8 billion of that in the fourth and another $3.5 billion year-to-date, which makes HEDJ our second largest ETF with more than $9.5 billion in assets. This has been the key