WisdomTree Trust
245 Park Avenue, 35th Floor
New York, New York 10167
July 26, 2018
VIA EDGAR
Ms. AshleyVroman-Lee
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: | WisdomTree Trust |
File Nos.333-132380 and811-21864
DearMs. Vroman-Lee:
This response is provided on behalf of WisdomTree Trust (the “Trust” or the “Registrant”) with respect to Staff comments received orally on June 5, 2018 regarding the Trust’s Post-Effective Amendment No. 617, which was filed with the U.S. Securities and Exchange Commission (“SEC”) on April 20, 2018 for the purpose of registering shares of the WisdomTree Emerging Markets Multifactor Fund (the “Fund”). The Staff’s comments and the Trust’s responses are set forth below. Capitalized terms used, but not defined, herein have the same meaning given to them in the Trust’s registration statement.
Prospectus
1. | Comment: Please provide the Staff with the details of the Fund’s fee table via correspondence once they become available. |
Response: The Fund’s fee table is set forth below.
Shareholder Fees (fees paid directly from your investment) | None | |||
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | ||||
Management Fees | 0.48% | |||
Distribution and/or Service(12b-1) Fees | None | |||
Other Expenses | 0.00% | 1 | ||
Total Annual Fund Operating Expenses After Fee Waivers | 0.48% |
1 | Other Expenses are based on estimated amounts for the current fiscal year. |
2. | Comment: Please confirm that WisdomTree Asset Management does not plan to recoup any waived advisory fees or expenses reimbursed. |
Response: Confirmed. The fee waiver has been removed.
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3. | Comment: If the Fund will be investing in emerging markets, then the Fund should include the method that is used to determine if a country qualifies as an emerging market. |
Response: The disclosure under the “Additional Information About the Fund’s Investment Strategies” section has been replaced in its entirety with the following disclosure:
To be eligible for inclusion in the model for the Fund, a company must be either domiciled, incorporated, or have a high level of risk associated with at least one of 17 emerging market nations (Brazil, Chile, China, Czech Republic, Hungary, India, Indonesia, Korea, Malaysia, Mexico, the Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey). In addition, with respect to China, the model may incorporate American Depository Receipts (ADRs) or Global Depository Receipts (GDRs) and locally listed shares, and with respect to Russia, the Fund will own United States and London listed ADRs and GDRs.
4. | Comment: The Fund will pay Capital Gains on redemptions that are not made in kind. Please note that redemptions in cash could also include brokerage costs and additional capital gains taxes that could be placed on the Fund if the costs are not placed on the Authorized Participant. |
Response: The Registrant believes that this is adequately disclosed through the “Cash Redemption Risk” language.
5. | Comment: WisdomTree Asset Management notes that the Fund seeks to manage currency risk with dynamic currency hedging. Please include an explanation of how the Fund intends to achieve this and include the derivative risk disclosure language in Items 4 and 9. Additionally, will the Fund use derivatives to meet the 80% test, and if so, please confirm that the derivatives will be valued at market, and not notional, value. |
Response: The third paragraph under the “Principal Investment Strategies of the Fund” section has been replaced in its entirety with the following disclosure:
“WisdomTree seeks to manage the Fund’s currency risk by dynamically hedging currency fluctuations in the relative value of the applicable foreign currencies against the U.S. dollar, ranging from a 0% to 100% hedge. The hedge ratios on such foreign currencies are adjusted as frequently as weekly utilizing signals such as interest rate differentials, momentum, and value. The Fund uses forward currency contracts and/or futures contracts to the extent foreign currencies are hedged.”
Derivatives risk, including disclosure describing the specific risks related to foreign forward currency contracts and futures contracts, which are expected to be used to implement the currency hedge, is included in Item 4 of the Prospectus, and additional derivative risk disclosure language is included in Item 9. The Registrant also confirms that the Fund includes derivatives in its 80% policy and has added disclosure in the “Investment Limitations -Non-Fundamental Policies” section of the Fund’s Statement of Additional Information that the Fund’s derivatives will be valued at market value, not notional value, for purposes of its 80% policy.
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6. | Comment:WisdomTree has indicated that the Fund has a policy to not concentrate. Please confirm that the Fund will not invest greater than 25% of its assets in any industry or sector. |
Response: The Registrant confirms that the Fund has a policy to not concentrate in any one industry. As of the date of the Prospectus, the Fund did not concentrate (i.e., hold 25% or more of its total assets) in the securities of a particular industry or sector. However, the Fund currently invests a significant portion of its assets in each of the financial and information technology sectors and risk disclosure has been included in the “Principal Risks of Investing in the Fund” section for these sectors.
7. | Comment: Please explain the use of forward currency contracts and futures contracts in the Fund’s “Principal Investment Strategies of the Fund” section. |
Response: As noted in response to Comment 5 above, the “Principal Investment Strategies of the Fund” section has been revised to include the following language:
The Fund uses forward currency contracts and/or futures contracts to the extent foreign currencies are hedged.
8. | Comment: In accordance with FormN-1A, in Item 9, please include a more robust description of the Fund’s Item 4 investment strategy disclosure. |
Response: The Registrant respectfully declines to duplicate the Fund’s principal investment strategy, as described under “Principal Investment Strategies of the Fund,” in the Fund’s Item 9 disclosure. General Instruction C.3(a) of FormN-1A states that “[i]nformation that is included in response to Items 2 through 8 need not be repeated elsewhere in the prospectus.” Accordingly, we have not repeated the Fund’s principal investment strategies in the back half of the Prospectus. We note, however, that Item 9 of the Fund’s Prospectus includes some additional information about the Fund’s strategies that is not included in the Item 4 summary. For example, Item 9 provides additional detail about the factors considered by the Adviser in determining whether a country qualifies as an emerging market.
9. | Comment: Please summarize the Item 9 Derivatives Risk in the Item 4 “Principal Risks of Investing in the Fund” section. |
Response: The Derivatives Risk disclosure in Item 4 contains a summary of the Item 9 disclosure. The disclosure notes that the Fund may utilize both forward currency contracts and/or futures contracts to the extent foreign currencies are hedged. As a result, the Registrant did not make any changes to the Derivatives Risk disclosure in Item 4.
10. | Comment: “Market Risk” in Item 9 refers to “commodities, and other instruments”. Please remove the reference to “commodities” if the Fund does not intend to invest in them. |
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Response: The reference to “commodities” has been removed.
11. | Comment: In Item 9, investments made by the Fund in China, Korea and Taiwan are broken out specifically as countries in which the Fund intends to invest. Please include specific information, if known, relating to investments in these countries in the “Principal Investment Strategies of the Fund” section of the Prospectus. |
Response: The “Principal Investment Strategies of the Fund: section of the Prospectus has been revised to include the following:
As of the date of the Prospectus, the Fund has significant exposure to China and Taiwan and associated country risks have been added to Item 9, however the Fund’s country concentrations may change from time to time.
12. | Comment: In the Additional Information on Buying and Selling Fund Shares, there is a sentence noting that “Frequent purchases and redemptions for cash may increase portfolio transaction costs and may lead to the realization of capital gains. Frequentin-kind creations and redemptions generally do not give rise to these concerns...” Given that the Fund redeems for cash, consider if this sentence is applicable. |
Response: The Fund can transact both in cash andin-kind, and, as a result, the Registrant believes that this disclosure is appropriate to keep in the Prospectus.
13. | Comment:Please expand the Models and Data Risk in Item 9. |
Response: Item 9 has been revised to include the following risk disclosure:
The Fund is actively managed based upon the Adviser’s quantitative model, which is heavily dependent on data from one or more third parties and may not perform as intended. If the computers or other facilities of the data providers malfunction for any reason, model calculation and dissemination may be delayed, and trading of Fund shares may be suspended for a period of time. Errors in the model data, calculations and/or the construction of the model may occur from time to time and may not be identified and/or corrected by the Adviser or other applicable party for a period of time or at all, which may have an adverse impact on the Fund and its shareholders. The potential risk of continuing error may be particularly heightened in the case of the model, which will likely not be used by other funds or managers.
14. | Comment: Please indicate who will serve asSub-Adviser of the Fund. |
Response: BNY Mellon Asset Management North America Corporation will serve as theSub-Adviser to the Fund.
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Please feel free to contact me at917-267-3855 with any questions.
July 26, 2018
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Sincerely, |
/s/ Joanne Antico |
Joanne Antico |
Assistant Secretary |
cc: | Ryan M. Louvar, Esq. (WisdomTree) |
W. John McGuire, Esq. (Morgan, Lewis & Bockius LLP)
K. Michael Carlton, Esq. (Morgan, Lewis & Bockius LLP)