3. WisdomTree Struggling To Keep Up
WisdomTree is a publicly traded ETF-only company—the only one of its kind. Because of that, some like to associate its health with that of the broader ETF market. If that were the case, you could say things would not be looking too good for ETFs.
Why? WisdomTree has had a challenging year (or two), seeing total AUM grow only about $4 billion in 2019, or 11% from year-end 2018 levels. The company’s asset growth has not kept pace with the industry.
WisdomTree, which closed nine ETFs in 2018 and eight ETFs this year, dropped one spot in the ETF issuer ranking in 2019, sitting now at No. 8 with $39 billion in total assets and surpassed by VanEck.
The WisdomTree U.S. MidCap Dividend Fund (DON) is WisdomTree’s biggest fund right now, with $4 billion in assets, and the firm remains well-known for its lineup of dividend-focused ETFs, including funds such as the WisdomTree US Quality Dividend Growth Fund (DGRW). These strategies have attracted some new assets for the firm this year.
But WisdomTree is also widely known for its currency-hedged ETFs, a segment that has been largely out of favor in 2019. The WisdomTree Europe Hedged Equity Fund (HEDJ) and the WisdomTree Japan Hedged Equity Fund (DXJ), among others, were net asset losers year to date.
4. The Mighty Small
There are 120 ETF issuers in the market, and two-thirds of them have less than $1 billion in ETF assets each. The smaller their asset base, the easier it is to have impressive percentage growth any given year.
That said, some of these smaller players are carving serious inroads into the ETF market, even if we are talking about millions—not billions—in growth. Companies like Legg Mason, GraniteShares, Amplify and ARK have practically doubled their ETF asset bases this year.
These companies are behind interesting—sometimes first-of-a-kind—funds that fill investor demand for specific access, such as the online retail-focused Amplify Online Retail ETF (IBUY); the GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF (COMB); the ESG-focused ClearBridge Large Cap Growth ESG ETF (LRGE) and the ARK Innovation ETF (ARKK), which is now a $1.7 billion ETF.
Among these smaller issuers, look at what Innovator Capital Management has managed to accomplish. The company has gone from “zero to 60” in a matter of months, quite literally.
Innovator launched its first defined outcome ETF a little over a year ago, the Innovator S&P 500 Buffer ETF – July (BJUL), and today manages $2.1 billion in total assets. Since January, Innovator has seen its asset footprint grow threefold in what’s perhaps the fastest growth among issuers this year.
Innovator’s impressive success is tied simply to a good product lineup. The company’s defined outcome family of funds known as Buffer ETFs clearly filled a void, and met demand at a time when investors were looking for ways to insure portfolios in the event of a recession.
With all the competition for shelf space among 2,200-plus U.S.-listed ETFs, Innovator and these smaller—and quickly growing—issuers show that there’s still room for great new investment ideas, packaged in easy-to-implement ETFs for a great price.
Contact Cinthia Murphy at [email protected]