WisdomTree Investments, Inc. (NASDAQ:WETF) Q2 2020 Earnings Conference Call - Final Transcript

Jul 31, 2020 • 09:00 am ET


WisdomTree Investments, Inc. (NASDAQ:WETF) Q2 2020 Earnings Conference Call - Final Transcript


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Jason Weyeneth

Thank you, and good morning. Before we begin, I'd like to reference our legal disclaimer available in today's presentation. This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

A number of factors could cause actual results to differ materially from the results discussed in forward-looking statements, including, but not limited to, the risks set forth in this presentation, in the Risk Factors section of WisdomTree's annual report on Form 10-K for the year ended December 31, 2019. WisdomTree assumes no duty and does not undertake to update any forward-looking statements.

Now it's my pleasure to turn the call over to WisdomTree's CFO, Amit Muni.

Amit Muni

Thank you, Jason, and good morning, everyone. Today, I'll walk through the important items for the second quarter; then turn the call over to our President, Jarrett Lilien, who will provide a deeper dive on distribution and operations; and then to Jono for closing remarks before we open the lines for Q&A. So beginning on slide three. We ended the quarter with assets under management of $57.6 billion, up 15% from the first quarter, driven by $7 billion of positive market move and net inflows of $126 million. Strong inflows into our European-listed products were largely offset by outflows from our U.S.-listed ETFs. Beginning in Europe, we generated $1.6 billion of net inflows, ranking us third in the industry, representing 30% annualized organic growth. The flows were well diversified across our commodities and leveraged in inverse product set.

In what has been a truly historic period for energy markets, we are the clear leader in European-listed energy ETF exposures. Our $600 million net inflows in the second quarter represented 75% market share. Our leverage in inverse product suite had $312 million of inflows, driven by a diverse range of commodity and equity exposures. We also remain a leader in precious metals with net inflows of $449 million. For our U.S.-listed products, we had $1.5 billion of outflows, of which approximately 50% were from HEDJ and DXJ, as our product set was not well aligned with investor sentiment. U.S. industry flows were extremely narrow this quarter with the vast majority going to fixed income, commodities and large cap growth, areas we have less or no exposure to. By contrast, 41% of our U.S. AUM were in the worst industry flowing categories.

However, there were several bright spots. Our cloud computing ETFs continue to rapidly scale post its launch last fall, generating $324 million of inflows, bringing its AUM at the end of the quarter to $419 million, one of our most successful launches ever. We have also seen continued strong asset growth success in XSOE, AGGY and DGRW, products we have highlighted in recent quarters, which we believe to be very well positioned. Given these pockets of success, it's important to examine our flows on a gross basis as outflows have masked these successes. Let's examine that on slide four. The chart on the left reflects our flows on