WisdomTree and Dreyfus to Market New Cash ETFs Together

WisdomTree Investments (WSDT.PK) announced a new partnership agreement on Friday with the $260 billion asset management firm, Dreyfus Corp., to help market its new line of cash and fixed-income exchange-traded funds [ETFs]. Under the deal, all WisdomTree cash and fixed-income ETFs will be co-branded and co-marketed by Dreyfus, which is a division of The Bank of New York Mellon.

"This is a very powerful deal for WisdomTree," said Jonathan Steinberg, CEO of WisdomTree. "It allows us to leverage the infrastructure of Dreyfus BONY Mellon ... to grow very cost effectively in this market."

WisdomTree, best known for its dividend-weighted equity ETFs, recently filed papers with the Securities and Exchange Commission [SEC] to launch 12 foreign currency money market funds. The funds will act like traditional money market funds, except they will be denominated in foreign currencies and pay local currency rates. The filing includes funds tied to developed market currencies like the British pound, the euro and the Japanese yen, but also emerging markets currencies like the Chinese yuan, Indian rupee and Brazilian real.

Steinberg said that new cash and fixed-income products may find appeal with institutional clients that have not previously been the target of WisdomTree sales efforts. In particular, he said, international cash products could be of interest to corporate treasurers and CEOs across America.

"We think international cash is an immense opportunity, and we have, jointly between Dreyfus and WisdomTree, the tools to pursue that opportunity with great vigor," Steinberg said. "We have real expertise in equities and a sales force and marketing department that is spot on for the existing business line. This [partnership with Dreyfus] allows us to appeal to new audiences on the cash and fixed income side."

The deal marks the first entry of Dreyfus into the ETF space, something Dreyfus CIO Phil Maisano commented on in a statement:

"Dreyfus is excited to be entering the ETF business as it is an increasingly vibrant segment of asset management. The strategic venture between Dreyfus and WisdomTree creates a formidable player as both companies bring their respective expertise to the venture."

Dreyfus' parent company, The Bank of New York Mellon, is one of the largest service providers to the ETF industry, offering custody, accounting and administration services to many of the largest ETFs on the market.

"In the one-and-a-half years since we launched, we've developed a close working relationship with The Bank of New York Mellon," said Steinberg. "We see this partnership as a ringing endorsement of WisdomTree. The oldest financial firm in America is bringing its Dreyfus group into the ETF industry through a partnership with WisdomTree.

"We think this deal will help us emerge eventually as a profitable company."

There are other co-branding and co-marketing deals in the ETF space that echo this deal structure. PowerShares Capital Management partners with Deutsche Bank Commodity Services to market the PowerShares DB commodity ETFs, and that partnership has been quite successful. More recently, TD Waterhouse partnered with XShares to launch the TDAX target date ETFs; so far, that deal has been less successful, although it remains in its early days.

Written by Matthew Hougan

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