ETF Watch: WisdomTree's 4Q Earnings Fall

WisdomTree announced its fourth-quarter 2016 earnings on Friday, recording a significant year-over-year decline. The firm is the only publicly traded pure-play ETF issuer in the U.S.

With the inclusion of a $1.7 million goodwill impairment charge related to the acquisition of UK ETF issuer Boost, fourth-quarter net income and diluted earnings per share were $2.5 million and $0.02, respectively. Excluding the goodwill charge, fourth-quarter adjusted net income was $4.2 million, while earnings stood at $0.03 per share, a press release said.

That’s quite a bit less than fourth-quarter 2015’s net income of $20.5 million and diluted EPS of $0.15. It’s also a decline from the 2016 third quarter’s $8 million in net income and $0.06 in diluted EPS. Much of that falloff in income and earnings is due to the firm’s broad offering of currency-hedged non-U.S. ETFs, an investment space that fell out of favor during 2016.

“Negative sentiment around our two largest exposures in 2016 overshadowed several noteworthy accomplishments,” said Jonathan Steinberg, WisdomTree’s CEO and president, who noted that the firm also saw $1.9 billion in inflows to its U.S. equity ETFs, and launched one of the year’s most successful funds, the WisdomTree Dynamic Currency Hedged International Equity ETF (DDWM).

"Despite the challenges of 2016, we've laid the foundation and fundamentals for a successful 2017, and beyond,” Steinberg added.

The firm’s U.S.-listed ETFs had AUM of $40.2 billion at the end of 2016, a 28% decline from $56.6 billion at the end of the prior year. However, the firm grew AUM in European-listed ETFs from $773.9 million at the end of 2015 to $1.0 billion at the end of 2016, and assets in Canadian-listed ETFs to $68.6 million from nothing the year before.

Contact Heather Bell at [email protected].