==WisdomTree (WETF) plans to close and liquidate nine of its ETFs

WisdomTree plans to close and liquidate nine of its ETFs - the Funds will no longer accept creation orders after Friday, March 16, 2018 

• Includes: WisdomTree Japan Hedged Capital Goods (DXJC), WisdomTree Japan Hedged Health Care (DXJH), WisdomTree Japan Hedged Real Estate (DXJR), WisdomTree United Kingdom Hedged Equity (DXPS), WisdomTree ex-U.S. Hedged Dividend (DXUS), WisdomTree Strong Dollar Emerging Markets Equity (EMSD), WisdomTree Global ex-U.S. Hedged Real Estate (HDRW), WisdomTree U.S. Export and Multinational (WEXP), WisdomTree U.S. Domestic Economy (WUSA).

WisdomTree's Mo Slows

Why the pure-play in ETF stocks suddenly fell behind its small-cap and asset-management peers in September.


Sometimes the truth hurts. WisdomTree Investments, the only pure-play provider of exchange-traded funds, has lost more than 30% of its stock-market value since late August, while small-caps have dropped just 4%. Earlier this past summer shares of WisdomTree (ticker: WETF) were easily beating both small-caps and other asset managers.

Why the big swings in the relative performance of the ETF sponsor's stock? A major contributor may be the firm's otherwise laudable transparency. WisdomTree's Website updates the company's asset levels daily and self-reports net inflows weekly. As a result, attentive investors have a pretty good idea how the ETF specialist is doing at any time.

When it reports third-quarter financials this month, for instance, WisdomTree's inflows are expected to wind up around $185 million. That would be its second-worst quarter of flows since the market bottomed in 2009, observes Sterne Agee analyst Jason Weyeneth. It also would represent WisdomTree's first quarter with less than $1 billion in inflows over the past five quarters. "For this company, the third quarter is looking like a disappointment, considering the momentum it has built up to this point," says Weyeneth.

The firm, chaired by hedge-fund legend Michael Steinhardt, has mostly enjoyed an excellent early history. It's created a niche using alternative ETFs that compete against BlackRock's (BLK) iShares and State Street Global Advisors' (STT) SPDRs. However, WisdomTree, which recently moved to Nasdaq from the pink sheets, organizes its ETFs by fundamentals like dividends and profits rather than by market cap as the others do. It's also become an active manager of ETFs.


Recent flows have been negatively affected by one large client that pulled around $700 million from a few funds that were focused on emerging markets and currencies in the last week of the quarter, Weyeneth notes.

Despite the stumbles, the fundamental long-term growth story for WisdomTree remains bright as it participates in a fast-growing area. The shares have risen almost 50% this year, blowing past the typical money manager's 20% loss in 2011. Still, the slower inflows mean that the company didn't reach its own target of reaping 3% to 5% of total industry inflows in the most recent quarter. But WisdomTree's prior flows have allowed it to stay on plan for the year. Heading into the fourth quarter, the company's funds in 2011 have attracted about 4% of net new money heading into ETFs.

WISDOMTREE WASN'T THE ONLY ETF PROVIDER to lose ground in September, as European sovereign-debt woes and weaker global economic growth were reflected in lower asset prices for nearly everything.

With the blue chip SPDR S&P 500 ETF (SPY) falling 7% in the final month of the third quarter, assets of ETFs and exchange-traded notes slid 9% to $973 billion from August, says the National Stock Exchange.

ETF asset totals were still about 8% ahead of where they were at the same time last year. That, however, was quite a bit slower growth than the 28% seen from September 2009 to September 2010.

WisdomTree to Liquidate 10 ETFs

SAN DIEGO (ETFguide.com) - WisdomTree Investments has decided to pull the plug on ten struggling ETFs. All but one ETF is concentrated on stocks. The bulk of ETFs to be liquidated focus on international equity industry sectors like healthcare and technology. None of the funds were able to gain traction with investors.

According to the New York, NY-based company, the funds represent less than 3% of their roughly $6 billion in assets under management. .

'We proposed the closure of 10 ETFs in order to create capacity for future growth initiatives, and because we believe it is in the best interest of our customers and shareholders to dedicate our resources to areas of greater client interest,' said WisdomTree CEO Jonathan Steinberg. 'We have no plans to make any further closures and are fully committed to maintaining and developing an innovative product line, including the introduction of new funds in the coming months.'

While ETF launches as of late have been more common than closures, other providers like Claymore and MacroShares have recently folded unsuccessful ETFs.

Low asset levels coupled with low expense ratios is a deadly combination in the hyper-competitive ETF business. Economies of scale created by large asset inflows are needed for new products to survive.
The final day of trading on the NYSE Arca will be Wednesday, March 24, 2010. Shareholders who do not sell their Fund shares by this date will have their shares automatically redeemed on March 29, 2010, the Funds' last day of operations.

Here's a list of the WisdomTree ETFs set for liquidation:
Name
WisdomTree International Technology Sector Fund (NYSEArca: DBT - News)
WisdomTree International Financial Sector Fund (NYSEArca: DRF - News)
WisdomTree International Health Care Sector Fund (NYSEArca: DBR - News)
WisdomTree International Consumer Staples Sector Fund (NYSEArca: DPN - News)
WisdomTree International Consumer Discretionary Sector Fund (NYSEArca: DPC - News)
WisdomTree International Industrial Sector Fund (NYSEArca: DDI - News)
WisdomTree International Communications Sector Fund (NYSEArca: DGG - News)
WisdomTree Europe Total Dividend Fund (NYSEArca: DEB - News)
WisdomTree Earnings Top 100 Fund (NYSEArca: EEZ - News)
WisdomTree U.S. Short Term Government Income Fund (NYSEArca: USY - News)

Mideast ETFs

WisdomTree Middle East Dividend (GULF) and Market Vectors Gulf States Index (MES)

Dubai is one of seven autonomous city-states that make up the United Arab Emirates, where GULF and MES have invested a chunk of their money. GULF, with 16% of its money in the United Arab Emirates, has lost 2% year to date, while the benchmark iShares MSCI Emerging Markets ETF (EEM) has gained 67%. MES, with a 27% exposure to the United Arab Emirates, has ticked up just 1%.

These ETFs also lagged the emerging markets index off the March lows. Since March 2, the MSCI Emerging Markets index spiked 109% vs. 27% for GULF and 42% for MES. Both GULF and MES topped in early October and sank below their 10-week moving averages on heavy volume later that month. When EEM hit a fresh 52-week high in mid-November, GULF and MES were consolidating between their 10- and 40-week moving averages. On Monday, both GULF and MES sank below their 40-week lines — an area few ETFs have seen the March lows.