plans to spend as much as $11 million this year to increase WisdomTree's
] sales force by 50 percent. That's after January that Steinberg's CFO describes as "the best month ever for WisdomTree" thanks to $4.6 billion in net inflows.
On Friday the New York City-based ETF provider revealed
fourth quarter 2014 diluted earnings per share of $0.07. Assets under management rose 12.6 percent last year (including 9.7 percent in Q4 alone) to $39.3 billion on December 31, 2014, thanks in part to net inflows of $5.1 billion of U.S.-listed exchange-traded ETFs for 2014.
On WisdomTree's earnings call Friday morning, transcribed by Seeking Alpha
, Amit Muni
, chief financial officer and executive vice president of finance, confirmed a plan to spend $12 million to $16 million on strategic investments in 2015. $7 million to $11 million of that is allocated to boosting the sales force, by adding 20 to 25 more sales people to WisdomTree's existing sales of 40 while also boosting the sales support staff. Muni also revealed that Luciano Siracusano
, formerly head of sales, will become chief investment strategist while WisdomTree searches for a new sales chief.
In response to a question from Jefferies analyst Surinder Thind
, Siracusano confirmed that the new sales hires "are going to be phased in throughout the year."
Other pieces of that $12 million to $16 million strategic investment, Muni revealed, will go towards: launching eight to ten new ETFs (at a minimum price tag of at least $175,000 each, i.e. at least $1.4 million); $1.5 million in extra marketing spending; and spending $2 million to add eight to twelve more operational and administrative staff and to improve WisdomTree's business intelligence and distribution analytics technology.
"Broadly, we are investing in products, our people, our platform, with continued investment across sales, marketing, research, and home office infrastructure," Steinberg said in his opening remarks on the call. These investments will enhance our position within the fast growing ETF market and enable us to better exploit the tremendous opportunities we are seeing."
Also in his opening remarks, Steinberg took some time to preach about the growth of the ETF space:
More broadly at the ETF industry level 2014 can only be described as a year of strong momentum and enormous promise.
Recently, ETF surpassed $2 trillion in assets in the U.S. alone and $2.8 trillion worldwide. Both are important milestones. Another milestone of importance was ETF industry inflows. In 2014, the industry had inflows in the U.S. of $239 billion, an all-time record. For some context, the traditional mutual fund industry has had $300 billion and $400 billion of inflows in years past.
On today’s call, we will discuss some avenues of growth for the ETF industry and the plans WisdomTree has identified to capitalize on these opportunities. But before we get to the numbers in packets, let’s be clear about WisdomTree’s opportunity.
It is so easy to be distracted by old debates like passive versus active or new terminology like smart beta and liquid alts. The simple truth is the ETF structure is just that, a structure by which you can access all of these asset classes and strategies. But it is a structure with the characteristics central to a positive investing experience: transparency, liquidity, and tax efficiency, plus overall flexibility and convenience. It is a matter of fact, not opinion, that ETFs are superior to traditional investment products in these crucial respects. So $2 trillion in assets and $200 billion plus in annual inflows is just the beginning.
Transparent ETFs are competing with the heart and soul of asset management, and they are winning. Again for a perspective, over the past 10 years, the ETF industry in the U.S. has taken in $1.4 trillion in net inflows.
With continued growth in existing funds and existing sales channels, plus the momentum we are gaining from new products, new sales channels and new geographies, I believe the next 10 year will be even stronger. I expect the ETF industry to average at least $250 billion to $300 billion of inflows annually over the next 10 years. That translates into $2.5 trillion to $3 trillion in inflows over that timeframe. It is easy to imagine that in 10 years the U.S. ETF market having $5 trillion to $6 trillion in assets.
It is against this backdrop that we are reaffirming our longer term goal of a $100 billion in AUM, as well as our 3% to 5% market share of inflow target. WisdomTree is an important proxy for the ETF industry and at the company level WisdomTree is also demonstrating exceptional growth. In fact, in the fourth quarter and even more recently year-to-date, we are demonstrating industry leading growth.
For WisdomTree’s leadership team, the most important question is, what can we do to make sure we are positioned to maximize our growth potential at this point of company development and industry inflection?
To dig deeper into what's going on at WisdomTree, read its Q4 2014 earnings release
and Seeking Alpha's transcript
of the earnings call.
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