WisdomTree: A Buy On Its ETF Prospects?

Oct.19.06 | About: WisdomTree Investments, (WETF)

Here’s a new twist on the old homily about buying shares in mutual-fund companies instead of their funds. It goes: buy shares in exchange-traded fund companies instead of their ETFs.

Specifically, says financial blogger Confused Capitalist, buy shares in WisdomTree Investments (WSDT). Sales of ETFs in recent years have grown six times faster than mutual funds and WisdomTree’s new fundamental-based ETFs promise even better growth rates given back testing shows they outperform the market (i.e. market-cap weighted indexes).

Then there is the impressive team of backers including professor Jeremy Siegel, former SEC chairman Arthur Levitt, and former hedge-fund manager Michael Steinhardt. But WisdomTree’s shares trade on the “pink sheets.” And as Richard Kang notes, there is competition from the FTSE-RAFI group, and as announced this week, from State Street Global Advisors.

Maybe the ETFs are better after all? Well, at least better than stock in T. Rowe Price (NASDAQ:TROW), Franklin Templeton, and Legg Mason (NYSE:LM)?