Luciano Siracusano

Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management

Niki -- I started working on an answer for you but the clock ran out on me.

To the Seeking Alpha Community:

I made a few additional posts below, that I actually posted earlier in the day. Thanks to all of your for questions. Sorry I could not get to answer all of them. They were great. I hope to interact with you again in the future.

Best,
Luciano

Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management

Richard, this link takes you to a summary of the selection requirements for WisdomTree’s dividend indexes. I believe you can find the answer to your questions here, as some of these thresholds vary depending on whether it is a domestic index or one covering non-U.S. securities in other developed equity markets.

www.wisdomtreeindexes....

Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management

Richard,
The WisdomTree Indexes were created by WisdomTree Investments after years of extensive research. As Director of Research, I work with a team of professionals to oversee the operation of the indexes. WisdomTree Asset Management, a registered investment adviser, oversees the operations of each ETF, including the portfolio management and the operation of the other service providers to the Funds. BNY Investment Advisors serves as the sub-advisor with respect to the day-to-day portfolio management and operations of each WisdomTree ETF. As sub-adviser, BNYIA is responsible for executing portfolio transactions. The WisdomTree indexes are calculated, maintained and disseminated by an independent index calculation agent. WisdomTree has been fortunate to attract seasoned management from within the ETF industry to help manage its ETF business. More information on WisdomTree’s role as investment adviser and BNY Investment Advisors role as sub-adviser can be found in the WisdomTree ETFs’ Statement of Additional Information or “SAI”. The SAI can be found on wisdomtree.com in the “Library” section.

Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management

Richard,

Since we have so many different indexes, measuring different regions and market capitalizations, I really am not able to generalize on how the returns of the WisdomTree indexes compare to specific indexes. So the best thing I can do is point you to information about the performance of our indexes available at wisdomtreeindexes.com. The FTSE/RAFI indexes you mentioned select, rank and weight stocks by a variety of fundamental metrics. Philosophically, we support that approach. However, we believe our approach is more transparent (our complete methodology is fully disclosed at wisdomtreeindexes.com) and easier to understand (since we focus on a single factor: dividends). We believe you are absolutely right in focusing on relatively low fees as one of the reasons for the success of traditional ETFs. This is an important area often overlooked by some investors. Expense ratios for WisdomTree ETFs are disclosed at wisdomtree.com. We invite you to draw your own conclusions as to whether the WisdomTree ETFs offer a meaningful advantage in terms of fees. If you wish to calculate “spreads,” you will need to do the math, depending on which cap-weighted ETF you choose to compare to.

Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management

Neil, thanks for the question and the support. I can’t comment on WisdomTree’s stock or the operations of our company. However, I am, like you, bullish on the future of the ETF industry. Do you know anyone who is bearish on the future of the ETF industry?

Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management

Thanks for the question. I understand that there are active traders who use ETFs to implement a variety of trading strategies, just as there are many financial professionals who use ETFs to help implement long-term investing plans. That is a credit to the ETF structure that it can serve so many, sometimes contradictory, needs. Many people view ETFs as tools or building blocks that can help add flexibility and diversity to a well-balanced portfolio in order to help achieve short-term and long-term strategies. I think there is merit to this approach. However, as someone who understands how well passive index investing has served investors over long holdings periods, I will refrain from saying anything that encourages active trading.

Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management

Hello, Vincenzo:

WisdomTree Investments is committed to innovation and we will continue to evaluate the merits of various passive, rules-based, investment strategies that can serve investors. We believe our first family of fundamentally-weighted... dividend ETFs are gaining market acceptance because they track transparent, unique and easily understood indexes that measure broad segments of the developed world. To the extent we can create products that are additive to or complement what we have done already we will, but I can’t comment on any specific applications at this time because of SEC regulations.

Secondly, assets under management for fundamentally weighted indexes are growing rapidly, but one must realize that we are talking about growth from small absolute levels. There are trillions of dollars linked to capitalization-weighte... indexes and many trillions more in active mutual funds. I think we are many years away before the level of assets under management tied to fundamentally-weighted indexes can make a meaningful impact on the overall prices of stocks in the market. So I think we are a very long way away from any kind of equilibrium that would, in theory, arbitrage away price inefficiencies in stocks that may exist.

Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management

Steve, this is a good question.

Regrettably, I need to sign off now and head out to some meetings. I will be back in my office tomorrow afternoon to address more questions.

Best to all of you who are participating in this discussion,
Luciano

Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management

Geoff,

The first 20 WisdomTree ETFs were launched on June 16th. Performance information for those funds are updated monthly and are available at wisdomtree.com. Information on the historical performance of the WisdomTree indexes since June 1, 2006, and information on the hypothetical performance of the WisdomTree indexes prior to June 1, 2006, is also available at wisdomtree.com.

Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management

Sorry guys, that’s outside the scope of our forum today and I will not comment.

Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management

As many of you may know, WisdomTree Investments’ largest shareholder, Michael Steinhardt, was a legendary hedge fund manager. WisdomTree choose this path because we wanted to bring our investment approach to the widest possible audience through what we believe is the most investor-friendly structure: the exchange traded fund. With respect to the second part of your second question, perhaps one of the bloggers out there, better versed in such matters than I, can provide you an answer.

Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management

David, I didn't realize this was you again, but here is another answer.

On our website, we have real-time total return data for both our international ETFs and our international indexes. This information gives you a basis to compare non-U.S. dividend-paying stocks to comparable cap-weighted international indexes since our indexes and ETFs were launched in June, 2006. WisdomTree also displays information on its website that provides data to make comparisons over longer time periods. By the way, Dow Jones Indexes and MSCI have also published materials showing how portfolios of non-US. dividend-paying companies would have performed compared to relevant cap-weighted indexes on an annualized basis over longer-time periods. I believe the answer to the thrust of your question can be found by examining these different materials.

Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management

SW. Let me respond to the shorter-answer questions first and come back to questions 3 and 4 later.

As of yesterday's close, assets under management for WisdomTree ETFs were approximately $1.35 billion. By the way, assets under management for each WisdomTree fund are disclosed daily on our website.

Regarding fees, the expense ratio for our domestic equity ETFs is 28 to 38 basis points, and 48 to 58 basis points for our international equity ETFs. As you probably know, commission charges also apply when you buy or sell ETFs on an exchange.

At WisdomTree, we also have the ability to provide separately managed accounts for institutional and other qualified investors, or to license our IP to pension fund managers who wish to manage their portfolios “in house” based on WisdomTree’s proprietary indexes. Fee schedules for our non-ETF products vary; more information on these other options is available by going to the home page on WisdomTree.com and clicking through on the tab at the top entitled, "separate accounts.”

Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management

Matthew, in response to your second question:

Over the past several years, there have been a series of fundamentally weighted ETFs introduced into the market place, beginning in 2003 with DVY, which was designed to track a new Dow Jones index, The Dow Jones Select Dividend Index. This dividend-based index ranks and selects companies based on certain fundamental ratios and then weights components in the index based on dividend per share, a fundamental metric. FTSE actually has two families of fundamentally weighted indexes and, in our view, we share common ground conceptually on why you would want to choose the fundamentally weighted approach. With respect to the specific sector funds you mentioned, I really don’t know a lot about them. Maybe some of you bloggers could educate me as to how specifically the stocks are selected for the underlying index and how specifically the components are weighted. There are now more than 100 domestic sector ETFs in the U.S. WisdomTree’s fundamentally weighted international sector funds exist in a much less crowded space. In October 2006, WisdomTree brought to market the first pure international sector ETFs listed in the U.S.

Interview: Luciano Siracusano, Director of Research for ETF Firm WisdomTree Asset Management

Matthew, in response to your first question:

Suitability depends on the client and the investment objectives that need to be met. WisdomTree’s goal has always been to create viable alternatives to cap-weighted indexes in every major market segment and across major regions of the developed world. If we look at how allocations are made in the real world -- by financial advisors, consultants and investment committees -- some of the greatest pools of capital are benchmarked to indexes in the US. large-cap space. WisdomTree has four domestic funds that are predominantly largecap (DTD, DLN, DHS, and DTN). They meet different needs depending on how much selection risk one wants to take and whether the goal is to gain large-cap exposure with generally lower historic betas, or the goal is to provide a fundamental alternative to large-cap capitalization-weighte... indexes. If you had an interest in the international small-cap space, you had no U.S.-listed ETFs to choose from until WisdomTree came to town. Now you have three choices from WisdomTree -- DLS, DFE and DFJ – including ETFs that give exposure to Japanese small-cap and European small-cap companies. We believe WisdomTree has tools that investors can use to create global dividend-based portfolios. At WisdomTree, we don’t give investment advice. We just provide fundamentally-weighted alternatives to traditional cap-weighted index funds.