WisdomTree Investments
WisdomTree Announces Fourth Quarter And Year-End 2008 Results
Wednesday 04 February 2009
$29.5 million net inflows for the quarter, $1.4 billion total net inflows for 2008
25 out of 41 equity funds outperformed benchmarks in Q4,
23 out of 39 outperformed in 2008
NEW YORK—February 4, 2009- WisdomTree (Pink Sheets: WSDT - News), an industry leading index developer and exchange-traded fund (“ETF”) sponsor, today reported a net loss of $5.6 million in the fourth quarter of 2008, flat with the net loss in the third quarter of 2008. Proforma operating net loss, which excludes stock-based compensation, depreciation and amortization, and interest and investment income, improved by 23.3% in the quarter to $3.0 million from $3.9 million in the third quarter. The full year net loss was $29.0 million compared to $25.1 million in 2007. Proforma operating net loss for the full year was $18.4 million compared to $16.7 million in 2007.
WisdomTree CEO Jonathan Steinberg commented, “These are challenging times, but these are also important times of change in the asset management industry as difficult market conditions have highlighted the importance of transparency, liquidity and tax efficiency like never before. Recognition of these structural advantages helped the ETF industry as a whole take in approximately $178 billion in net inflows in 2008 in stark contrast to the net outflows of mutual funds.
“The strong relative performance of WisdomTree’s fundamentally weighted ETFs against their market capitalization-weighted benchmarks along with the launch of the industry’s first “1940 Act” currency ETFs in collaboration with the Dreyfus Corporation helped us achieve net inflows in a difficult fourth quarter and 2008. Such progress is a significant accomplishment and reason for optimism going forward.”
Assets Under Management and Performance
As of December 31, 2008, assets under management (“AUM”) tied to the WisdomTree Indexes were $3.6 billion, down 21.8% since September 30, 2008. At the end of the fourth quarter, ETF AUM were $3.2 billion, down 22.0% from September 30, 2008. The severe decline in the valuation of global equity markets contributed to $925 million of net market depreciation of the WisdomTree ETFs in the fourth quarter. Despite domestic markets declining nearly 22% and international markets nearly 20%, net inflows into WisdomTree ETFs were $29.5 million in the fourth quarter. For the full year, ETF AUM declined 30.2% primarily due to $2.3 billion in market declines despite almost $900 million in net inflows.
WisdomTree’s fundamentally weighted ETFs experienced strong relative investment performance during the fourth quarter. Approximately 80% of the $2.9 billion invested in WisdomTree’s 42 equity ETFs on December 31, 2008 were in funds that, since their respective inceptions, have outperformed their benchmarks through that date. 25 of WisdomTree’s 41 equity ETFs outperformed their comparable benchmarks in the fourth quarter. For complete performance information on all WisdomTree ETFs, please click here or visit www.wisdomtree.com.
Recent Business Activity
• On November 12, 2008, the Company announced zero capital gain distributions across all equity ETFs for 2008.
• On November 14, 2008, the Company announced the appointment of Jarrett Lilien, former
E*TRADE FINANCIAL Acting CEO, President and Chief Operating Officer, to the Company’s Board of Directors.
• On December 3, 2008, the Company launched the WisdomTree LargeCap Growth Fund (ROI).
• On December 23, 2008, the Company announced a change from annual to quarterly dividend distributions for international ETFs.
• On January 5, 2009, the Company announced the appointment of Ernst & Young LLP as new independent auditor.
• On January 20, 2009, the Company announced the WisdomTree “High-Yielding Equity” portfolios across the
• On January 26, 2009, James Manley (Chairman and CEO of Atlantic-Pacific Capital, Inc.) resigned from the Company’s Board of Directors and his designee, Anthony Bossone (Chief Financial Officer of Atlantic-Pacific Capital, Inc.) was appointed as a Director.
Fourth Quarter Financial Highlights
Comparison to the third quarter of 2008
Revenues
Total revenues for the fourth quarter decreased 31.7% to $4.2 million as compared to $6.2 million in the third quarter. Average ETF assets under management decreased 31.2% primarily due to market declines despite $29.5 million of net inflows. The average advisory fee earned during the fourth quarter was 0.51%, down from 0.52% in the third quarter primarily due to a change in the mix of our ETFs assets. As a percentage of our total ETF assets, our U.S. ETFs assets (in particular our dividendfocused ETFs) increased and international assets decreased. Our U.S. ETFs have a lower advisory fee than our international ETFs.
Expenses
Total expenses decreased 17.3% to $10.1 million, from $12.2 million in the third quarter. Excluding stock-based compensation and depreciation and amortization charges, proforma operating expenses decreased 28.5% to $7.2 million, from $10.1 million in the third quarter.
• Compensation and benefits expense decreased 47.2% to $2.6 million from the third quarter.
Excluding stock-based compensation, compensation and benefits expense decreased 71.0% to $1.0 million from $3.6 million. This decrease was primarily due to lower levels of incentive compensation.
• Fund management and administration expenses decreased 2.1% to $3.9 million from the third quarter.
• Marketing and business development decreased 34.1% to $1.0 million from the third quarter due to lower advertising spending due to the current market environment.
• Professional fees increased 17.6% to $1.1 million from the third quarter due to higher corporate legal expenses.
• Occupancy, communications and equipment expense decreased 3.2% to $0.4 million.
• Other expenses increased to $1.0 million from $0.4 million from the third quarter. Excluding stock-based compensation, other expenses increased to $0.5 million from $0.4 million primarily due to a non-cash loss on excess office space sub-leased at our current corporate office.
Balance Sheet
As of December 31, 2008, WisdomTree had total assets of $34.9 million which consisted primarily of cash and cash equivalents of $13.3 million, and investments in
December 31, 2008. Fully diluted shares outstanding were approximately 123.7 million as of
December 31, 2008.
Fourth Quarter 2008 Earnings Call Information
WisdomTree will discuss its results and operational highlights during a conference call on Thursday, February 5 at 9:00 a.m. ET. The call-in number will be (888) 713-4215, passcode 11401705. Anyone outside the
About WisdomTree
WisdomTree® is a leading ETF sponsor and innovative index developer using its own fundamentally weighted index methodology. WisdomTree also licenses its indexes to third parties for proprietary products and offers a platform to promote the use of WisdomTree ETFs in 401(k) plans. Approximately
$3.4 billion in assets currently are managed against the WisdomTree Indexes by WisdomTree and third parties under license from WisdomTree. For more information, please visit www.wisdomtree.com or www.wisdomtree401k.com.
WisdomTree is the marketing name for WisdomTree Investments, Inc. and its wholly owned subsidiaries WisdomTree Asset Management, Inc. and WisdomTree Retirement Services, Inc. WisdomTree Asset Management, Inc. is a registered investment advisor and is the investment advisor to the WisdomTree Trust and the WisdomTree ETFs. The WisdomTree Trust is a registered open-end investment company. Each WisdomTree ETF is a series of the WisdomTree Trust. WisdomTree Retirement Services, Inc. supports the use of the WisdomTree ETFs in retirement plans by financial professionals.
Media Contact:
Stuart Bell
WisdomTree Investments, Inc.
(917) 267-3702
WisdomTree Investor Contacts:
KCSA Strategic Communications
Jeffrey Goldberger / Todd Fromer
+1 212.896.1249 / +1 212.896.1215