WisdomTree Enhances High Growth Category ETF
WisdomTree (NASDAQ: WETF) has announced the renaming and enhancements of the WisdomTree Modern Tech Platforms Fund to the WisdomTree Growth Leaders Fund (PLAT). Key improvements include a reduction in expense ratio from 45 bps to 20 bps, a new requirement for at least 7% revenue growth, and limitations on non-U.S. exposure. The fund targets high growth, mid- and large-cap companies beyond the FAANG stocks, focusing on the dominant platform business model. The adjustments reflect WisdomTree's strategy to enhance index performance and cater to investor demand.
- Reduction in expense ratio from 45 bps to 20 bps, improving cost efficiency for investors.
- Introduction of a revenue growth eligibility criterion, requiring at least 7% revenue growth, indicating a focus on high-performing companies.
- Targeting growth-oriented platform companies enhances the fund's potential for higher returns.
- None.
NEW YORK, Aug. 03, 2020 (GLOBE NEWSWIRE) -- WisdomTree (NASDAQ: WETF), an exchange-traded fund (“ETF”) and exchange-traded product (“ETP”) sponsor and asset manager, today announced various enhancements to the WisdomTree Modern Tech Platforms Fund (PLAT), whose name has been changed to the WisdomTree Growth Leaders Fund (PLAT).
Growth Exposure Through a Dominant Business Model – More than the FAANGs1
“Platform companies are transforming business and the enhancements we’ve made to PLAT better position the fund in the important growth category,” said Jeremy Schwartz, Global Head of Research at WisdomTree. “PLAT will continue to seek to provide exposure to high growth, mid and large market capitalization companies – more than the typical FAANG stocks – and now includes a growth screen criteria to emphasize the growth leaders aspect of it, in addition to providing lower fees.”
Platform companies have penetrated the global economy and are now a dominant business model for the 21st century. Platforms create value through connecting interdependent groups (e.g., Uber connecting a rider with a driver), while traditional businesses create value through linear production or supply (e.g., Ford or Hertz that produce/buy cars for sales/rent). PLAT targets companies operating large, scalable networks that disrupt the competitive landscape.
Summary of Methodology and Other Enhancements
Name: WisdomTree Growth Leaders Fund (formerly, WisdomTree Modern Tech Platforms Fund)
Expense Ratio: 20 basis points (bps) – a reduction of 25 bps from 45 bps
Revenue Growth Eligibility: at least
Non-U.S. Exposure: Limited to
Weighting Mechanism: Modified average of equal and market cap weights with
The Platform Business Model
While the traditional business model creates value through linear production of supply of a good or service, a platform business is a non-linear, asset-light2 model that creates value through connections. WisdomTree believes that the key competitive advantage that platforms have relative to legacy businesses is their ability to scale quickly and efficiently beyond the capability of linear businesses.
At a certain size, the net benefit of further scale is limited for a linear business, but unlimited for a platform business. As platforms scale, they increase in value without increasing costs, translating to higher revenue-growth and margins.
Schwartz added, “The structural advantages of the platform-based businesses we seek to invest in can be reflected in financial metrics through robust revenue growth, margin expansion, substantial free cash flow generation and strong returns on capital. Relative to the companies in the S&P 500 Index3, the constituents of PLAT have generated greater historical revenue growth essentially 3x higher than the typical S&P 500 companies with stronger margins. The sales growth rates of these companies are also approximately double the growth rates in some of the most popular growth strategies.”
PLAT seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Growth Leaders Index (the “Index”). The enhancements described herein associated with revenue growth, non-U.S. exposure and weighting mechanism are derived from changes to the Index. The Index is weighted based on a modified average of equal and market capitalization weights and is rebalanced annually. Learn more about WisdomTree Growth Leaders Fund (PLAT) here.
Jarrett Lilien, President and Chief Operating Officer at WisdomTree said, “We regularly review the methodologies in our ETF family, strategizing on index improvements and beyond, as part of WisdomTree’s goal of providing best-in-class product.”
1 FAANG is an acronym used in reference to five technology companies: Facebook, Amazon, Apple, Netflix and Alphabet (referencing its core subsidiary, Google). As of 6/30/2020, PLAT held
There is no guarantee that favorable historical growth metrics will translate to favorable performance.
2 Asset Light: A low level of physical assets on the balance sheet.
3S&P 500 Index: The S&P 500 Index is a cap-weighted index of 500 stocks selected by the Standard & Poor’s Index Committee designed to represent the performance of the leading industries in the U.S. economy.
Basis point: 1/100th of 1 per cent.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Funds before investing. To obtain a prospectus for WisdomTree Funds containing this and other important information, please call 866.909.9473 or visit WisdomTree.com to view or download a prospectus. Investors should read the prospectus carefully before investing.
There are risks associated with investing, including the possible loss of principal. Foreign investing involves currency, political and economic risk. Funds focusing on a single country or sector and/or funds that emphasize investments in smaller companies may experience greater price volatility. Investments in emerging markets, real estate, currency, fixed income and alternative investments include additional risks. Dividends are not guaranteed, and a company currently paying dividends may cease paying dividends at any time. Diversification does not eliminate the risk of experiencing investment losses. Due to the investment strategy of certain Funds, they may make higher capital gain distributions than other ETFs. Please see each Fund’s prospectus for a discussion of risks.
References to specific securities and their issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. You cannot invest directly in an index. WisdomTree Funds are distributed by Foreside Fund Services, LLC, in the U.S. only.
Jeremy Schwartz and Jarrett Lilien are registered representatives of Foreside Fund Services, LLC.
WTPR-20200729-0082
About WisdomTree
WisdomTree Investments, Inc., through its subsidiaries in the U.S. and Europe (collectively, “WisdomTree”), is an exchange-traded fund (“ETF”) and exchange-traded product (“ETP”) sponsor and asset manager headquartered in New York. WisdomTree offers products covering equities, fixed income, currencies, commodities and alternative strategies. WisdomTree currently has approximately
WisdomTree® is the marketing name for WisdomTree Investments, Inc. and its subsidiaries worldwide.
Contact Information:
Media Relations
WisdomTree Investments, Inc.
Jessica Zaloom / Amie Lauder
+1.917.267.3735 / +1.416.459.6835
jzaloom@wisdomtree.com / alauder@wisdomtree.com
FAQ
What is the new name of WisdomTree's Modern Tech Platforms Fund?
What changes have been made to the expense ratio of the Growth Leaders Fund?
What is the revenue growth requirement for companies in the WisdomTree Growth Leaders Fund?
How does the WisdomTree Growth Leaders Fund differ from typical FAANG stocks?
What limitations have been applied to non-U.S. exposure in the fund?
