WisdomTree Asset Management launched its first ETFs more than a decade ago, making it one of the pioneers in the industry.
Joe Tenaglia, asset allocation strategist at WisdomTree, which currently manages about 90 funds, talks about innovation in the ETF market and why his firm may continue to expand offerings in the actively – managed funds space.
What was one of the biggest trends of 2017?
One of the biggest trends we picked on was investors rotating from US equities into international equities, both encompassing the developed international and emerging markets. The reason behind that is really just based on valuations. The S&P 500 just celebrated its ninth anniversary of a bull market run that began in 2009. Ever since the financial crisis, international markets have not done as well as the US so we think investors are really thinking there’s a better value opportunity in the overseas markets.
What were some of your top funds last year?
Our two top performing ETFs are sister funds with each other, WisdomTree China ex-State-Owned Enterprises Fund and WisdomTree Emerging Markets ex-State-Owned Enterprises Fund. We think that companies that are partially or fully owned by the government don’t always have the shareholders in mind and aren’t always going to act in the best interest of the shareholders themselves. We created ETFs that give investors access to this part of the market but without having companies with government influence.
One area that we found a lot of investors interested in, which really started to pick up last year, was in the liquid alternatives ETFs. Not stocks, not bonds, but really a combination. One of them was our options writing strategy. It’s our WisdomTree CBOE S&P 500 PutWrite Strategy Fund. We took some tenants that some active managers have done and boiled it down to a rules-based repeatable process and then developed that into a very simple and liquidity and tax efficient ETF. That’s been a very positive one for us I would say. It’s been out for a little over two years and that was one of our top flow gatherers last year. Just like the active ETFs, the liquid alternative ETFs are really in the early innings, but I think in the next few years, you’ll continue to see that.
What’s in store for 2018?
I think you’re going to continue to see investors rotating away from the US into international markets. One area we find interesting is in international small caps. Looking to the small-cap base is really an organic way to get that exposure to domestic economies. That’s true of Europe, that’s true of Japan and that’s true of the US.
At WisdomTree, we’re going to continue to come out with new products where we think there’s a need in the market that’s not quite being met. We recently launched a WisdomTree CBOE Russell 2000 PutWrite Strategy Fund. The active ETF space is something we’re going to continue to look into as well. I wouldn’t be surprised if you see us launching an active ETF over the next few months.