High inflation, rising interest rates, and an investor shift towards value stocks have served WisdomTree well. On Friday, the ETF issuer reported nearly $4 billion in net inflows for the second quarter -- its strongest since 2015 -- and AUM of $74.3 billion.
“We’re enjoying some extremely strong flows,” said WisdomTree’s president and COO Jarrett Lilien. “Some of that is from our positioning in products that benefit from inflation, rising rates, and the shift to value.”
Lilien added that he doesn’t see these trends going anywhere yet.
“There are no signs that inflation is going away anytime soon, no signs that interest rates are not going to go higher, and the rotation to value is a trend that’s going to stay in place for longer as well,” he told VettaFi. “Those are the big trends in place, and we think they’ll continue to be the big trends for the next few quarters.”
Performance has also been strong, with 82% of WisdomTree’s AUM in funds that are beating their Morningstar benchmarks. “So, you throw that all in together, and it’s not a surprise that we’ve got the strong organic growth and strong flows relative to our competition,” Lilien said.
WisdomTree is also gaining momentum within its model portfolio business, which advisors are using to create customized models to help manage their client assets. “Managed models is a big macro theme in wealth management,” according to the WisdomTree president. “So, we’re seeing growing traction there as that macro trend takes hold in wealth management.”
WisdomTree is also looking to make cryptocurrency assets “more mainstream,” which Lilien believes can be achieved through the firm’s slow, steady, and responsible process.
“I’m reminded of the children’s story of the tortoise and the hare. We’re taking no shortcuts; we’re working with regulators,” he said.
At first, he found that WisdomTree’s slow and steady process was “very stressful” because it felt like it was moving too slowly. But when the so-called “crypto winter” kicked off and “people who moved too fast got burned,” he realized that WisdomTree was taking the right approach.
WisdomTree has launched a series of digital asset initiatives, from unveiling the creation of WisdomTree Prime, to the WisdomTree Enhanced Commodity Strategy Fund (GCC) (the first ETF to provide exposure to bitcoin futures), to its second investment in blockchain-based infrastructure provider Securrency Inc., to the launch of new crypto indexes.
“We’ve got this great momentum in our core ETF business, and one of our goals is to keep that momentum going,” Lilien said.
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