Personal Finance

Why WisdomTree Investments Stock is Dropping

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What: Shares of WisdomTree Investments, Inc. (NASDAQ: WETF) are down about 11% as of 3:00 p.m. EDT as global markets reel following a surprising Brexit vote.

So what: The majority of WisdomTree's fee-earning assets are concentrated in just a handful of currency-hedged ETFs, which have declined significantly in recent trading.

Since market open on Thursday, June 23, the WisdomTree International Hedged Equity ETF (NYSEMKT: HEDJ) has lost 7%. The WisdomTree Japan Hedged Equity Fund (NYSEMKT: DXJ) has lost about 6.8% of its value. In the first quarter, these two ETFs shed nearly $5.6 billion in combined Assets Under Management (AUM) as a result of market movements and customer outflows.

Now what: WisdomTree Investments is something of a leveraged bet on the performance of its funds, gaining and losing value at a faster pace than its ETFs under management. In the first quarter in 2016, a rout in international stocks sent AUM in its international hedged equity funds to the lowest level since the fourth quarter of 2014.

Investors worry that a Brexit-inspired decline in stock market values this quarter could further erode the manager's fee-earning assets and profitability.

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Jordan Wathen has no position in any stocks mentioned. The Motley Fool recommends WisdomTree Investments. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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