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Rating:Steinberg Defends WisdomTree's Self-Indexing Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, September 11, 2012

Steinberg Defends WisdomTree's Self-Indexing

News summary by MFWire's editors

If you want to learn more about WisdomTree's [profile] self-indexing process, take a look at IndexUniverse. WisdomTree CEO Jonathan Steinberg chatted with Olly Ludwig, the pub's managing editor, about how the ETF shop pioneered self-indexing and how it has helped the company find its place in the ETF sphere.

Steinberg said: "We create all the intellectual property on the indexes. And then we have an index-calculation agent calculate the indexes, which is very good use of our resources and their resources. But itís very different from paying basis points on growth of assets. Itís just a flat fee, so itís a very cost-effective mechanism as you scale."

On the accusations that there is an inherent conflict of interest in self-indexing, Steinberg said he can see no such thing.

"It is not a conflict of interest," Steinberg said.

WisdomTree hires a third party to calculate for them, and they also hire subadvisors such as Mellon Capital for equities and Western Asset Management for fixed income.

"So WisdomTree itself doesnít actually touch the money. Weíre not managing the money. We have a subadvisor managing the money, following the rules that are being calculated by a third party. And when we have additions and deletions to the indexes, we treat it just the way S&P does. We announce them in advance. SoI think itís a nonevent." 

Edited by: HFD

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