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Capital Markets

Fund managers bid up ETF sponsors even as doubts grow over smart beta

WisdomTree Investments is the latest acquirer of an ETF specialist looking to boost its credentials in smart beta, even as analysts urge end-investors to question the validity of this new so-called asset class.

WisdomTree Investments, the US-based passive asset manager and sponsor of exchange-traded funds (ETFs) and other exchange-traded products (ETPs) with $48.4 billion of funds under management, is seeking regulatory approvals for the agreed acquisition of ETF Securities’ European exchange-traded commodity, currency and short-and-leveraged business, which has $17.6 billion of assets under management.

Acquisition creates largest independent global
provider of ETPs

World’s largest providers by AuM ($bn)

world_ETPs-395#2

Source: WisdomTree 

If the deal is approved before the end of the year, WisdomTree, which only launched into ETF management in 2006, will become the world’s ninth-largest sponsor of ETPs and the world’s biggest independent specialist.

Jonathan Steinberg, chief executive of WisdomTree, says: “The acquisition will immediately add scale, diversification and profitability to our business in Europe, the second-largest ETF market in the world and a growing and strategically important region for us and the entire industry.”

He draws particular attention to the fact that ETF Securities started from scratch, like WisdomTree itself, just 14 years ago and has thrived in a competitive business thanks to the entrepreneurial spirit of its founder Graham Tuckwell.

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