WETF - Earnings call transcript Q3 2018

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Operator

Good day, ladies and gentlemen, and welcome to the WisdomTree Q3 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to introduce your host for today's conference Mr. Investor of Director Weyeneth, Relations. Jason Please go ahead.

Jason Weyeneth

morning. Good

Litigation we available Annual in in I'd Factors statements factors this the not on WisdomTree's Private could forward-looking the in to duty number no in to, results XXXX. undertake statements. may from like disclaimer for legal forward-looking within the Securities but XX-K the of differ our cause reference meaning Act XXXX. today's year of forward-looking Report update not to forth limited December of presentation statements, A Before section the the contain begin, Risk Reform including, set risks to presentation. and and materially XXst, does any actual presentation of assumes Form This discussed ended results WisdomTree

pleasure to the turn to call Muni. Amit WisdomTree's it's Now my CFO, over

Amit Muni

morning, turn operating for through quickly Jason, Since closing then and Q&A. items you, [ph] Thank opening important Jon to remarks will the everyone. good I before already up go with it off is the over and some call quarter known the our beta for

partly beginning by Slide So AUM end outflows of appreciation. our was market the on third global net reflecting at billion quarter $XX X, the offset

war trade Continued political further Japan and from drew in and uncertainty HEDJ Europe outflows DXJ. and

did Yen. see in September and the of driven turn we DXJ However, positive technical's flows weakening by Japan slight market

of greater of period brief XX%. demand, we market exhibited than this share producing During leadership market inflow

inflows organic past continuing region in The listing near Canada the suite to on for chart XX the shows, generated for equity record the down with show right remained breaks chart time As middle domestic strategies quarters. in strong our the ninth demand while growth. by fixed our the levels income inflows

with our the from DXJ equity segment both US depth continue core for from had treasury funds continues HEDJ we creations of on of and strategic to flow generating strategy by levels solutions, see and and to new percentage in two X. initiatives small which straight remains in Turning above years historical into due the breadth cap their advisor generated grow dividend partnerships. the saw US flow a also distribution and quarter quarter our for the funds continuing strength XXth and the fund The basis highlights and quarter. benefits to our mid demand million around ETFs channels weighted the to floating Slide in assets technology the daily funds number investments outflows we accelerated. has for Despite strongest earnings of inflows on Demand our October. the families. level, inflows nearly our $XXX during At led and USFR with rate of

monthly million and While volatility improved We this see a dividend our $XXX our US September DGRW in ETFs outflows did our on USFR, We USMF. with for and of funds week. trends saw flows US growth positive in inflows quarter. listed the fund had multi-factor basis continued until strength

international Let's take segment look on flows Slide a X. closer our at

our in of growth gold dividend remains exposure since inflows the generated In line million which million majority we've industry remain entering share. region. Organic commodities flows kind $XXX $XX $XXX of products had roughly market the driven quality yield over and favor. our aggregate and AUM overall assets growth of with Europe, where we're our EPS. muted bond Canadian raised Our of million of and enhanced We is by outflows of impressive out is

to market, Also products quarter, bringing enhanced leverage equity weeks resources we through first of ETFs the in Europe our though and our market from to US the helping into we have and Europe the reversal On across borrowing seen few the the volatility. in side, of with trends a Gulf scale of positive October inflows two our IP continue new strategies. offset

increased of in AUM Non-GAAP on outflows and million two the and million share turning look business regional X. in rate just from adjusted to our tax the were XX.X%, forward Revenues acquisition we market-to-market certain or goal we tax tax average securities. slightly reflecting commitment the XX% asset planning our lower to operating under and $XX of Now integration payment expect guidance reminder, The our of classes as post per blended the Slide of reduction XX% and financing our XX%. regions. reflects we fair quarter market ETF associated prior related to rate mix was due overall had The roughly $XX.X A to the results pressure to income quarter. XX% first gain a a which value within segment $X.XX the non-GAAP was net with international future items cost. on

quarter. well range. Based cost. nine margins expenses the Recent related for XX% cost new Turning Adjusted we identified declined last year Gross primarily margins as our the a shift slightly quarter's product US the slide. compensation launches segment ratio excluding second of acquisition X% was lower AUM we increased months to levels. reflecting was decline Total segment the The sequentially average by regulatory US first guidance the incentive driven XX.X% remain AUM the on million. levels, the lower expect were gross end margins and The mix XX.X%. operating on XX.X% next on the to down the similar marketing lower for compensation quarter in current around XX% to to to $XX.X call. as sequentially efficiencies of on

guidance results, year remain bottom the will compensation As the in we think range. US the of half full ratio the we anticipate in about

the Turning margins of let's were for operating segment. results down quarter. reflecting international to the in fund Gross take cost our look X, Slide a at XX.X% launches sequentially new

expenses were million near reflecting forward XX% large full operating acquisition our the X% the the Total we up as increased Adjusted going of margins gross XX.X%. of part XX% quarter excluding to securities. expect see for the cost ownership platform in benefits to related ETF We in scaling. Canadian $XX sequentially margins term segment

will be we And a rebranding turn to ETF pleasure launching it's to campaign over go securities, the now of my you. soon the well Speaking few integration to that continue Thank the new call very for months. continues Jon. will and

Jon Steinberg

Thank everyone. Good Amit. morning, you

been largest potential the investors bps the market sponsors. was managers the that fees. was pricing me, It for heightened With Given unlimited the the ETF early down at knew by plan with the in would the to issues I saw and despite business, world, had clearly there. intense focus on spend go viable the wanted largest competitive discussing in in on legacy the formulating different and a nearly XXXX's, - obvious a the increasingly industry of positioning asset would product beta need for build amongst already what decade when profitable X price asset an WisdomTree three and structure the of for I recent But nearly confuse the management. a be the to that future I In WisdomTree's no we'd industry. environment I to only three strategy. minute is knew, why ETF from also best

around launch like commodities what around business treasuries If beta, a tough first and you Europe securities be China to in floating US did ETF But you're to the did defend. need beta the rate in XXX. or to what we is going

better. The based fully and model active results of structure. the business of you be We product XX If our Whether to promise fundamentally benefits of weighted active. Modern have designed Alpha. management transparent first, strategy of are over We're our with need be index or past impressive The beat the you ETF delivering to majority beta. the call the aren't ETFs this years. been

Our XX billion competitive on pricing half the the allows than to over on superior The while funds chart past fee most let's ETF six equities. look has the bottom early where approach versus combination to the the and competitive and of table backward versus generated The the we've looking. mutual been We're the we approach is years. better The pressure active have our pricing Modern at pressure in active also category most is resulted able year managers of Slide points, navigate records, intensive forward. established at and these going competitors, than experience of left while beta. the has initial a average get entry $X in speed of Alpha a active less To US growth WisdomTree's in at where like cost the been operating of comparison products illustrate achieving which delivering this structures. faster shows this an take legacy active funds, inflows us performance economics, the passive deeper and and the repeatable marketplace

offers altogether the at differentiated strong price. beta in solutions and While and more expensive and than value right WisdomTree we different right an experience beta, proposition. strategies in deliver the structure, we're performing

differentiated more reflect gains. for newer ago performance approaches over and stronger beating with XX track managers funds active would Alpha. the since XX% is investors several domestic years at has generated franchise for of right, investment even We return of of of caps and after including and table This a points as since in for returns. capital delivering Modern funds equity been active more bps just because factors solutions launched impressive small. strong model the funds net after billion aggregate charging passive virtually and In is records XX categories higher XX% fees XX the ETFs, fee active mid as and even number even mutual these Looking our zero large be well returns beta partnerships. and while tax inception on basis with which and and portfolios, our of These share inception $XX and both

about most very We in our segment our in effort great also line feel growth our the well platform the We're here, balanced US not just expect to you in equities can competitive thrive on XX. the entire market. made positioned as as We this diversification and the strides product of ever innovation up. faster illustrated environment. very in even product see is and but been product strategy, across this good Slide it's We've

International significant commodities We AUM over US three fee equities of with rates. categories. attractive each and $XX billion with have equities,

of assets the liquid category our fixed and fixed income excited suite in Year-to-date generated billion since more the positioning growth $X over than and start income smaller doubling Alts While year. potential. remains product we're of about the a has inflows product very

Over impressive masked the stronger and execution income our fixed It to outflows of $XX diversification we're positioning rate since and launches million than in years The XXXX equities from DXJ income strategy. growth fund their we domestic past peak has in XXXX. feels for US the a four in rising environment. in been HEDJ me, fixed our domestic we've were

also We've expanded the effectiveness, to distribution solutions leveraging product addition partnerships. positioning and a through data strong our In our marketing and of our enhanced technology analytics. offering we've advanced platform,

additional fees and quarter, our agreements the on make access preferred we to During distribution platforms no signed and/or customers. to with funds transaction model with available

Ally XX Cetera where largest acquisition, available. are primarily in platform platform added relationships of our broker We've we their in Financial independent the securities expansion quarter This dealer reach new distribution our ETFs and ETF and second we're provider through also E-Trade's ETF ETFs TCA network. commission-free our the where global Canadian expanded Asia.

HEDJ. our of open from growth financial can shareholders. to is Looking and and now wave for attractive I the returns up we of WisdomTree next questions. your past appreciate delivering DXJ pain interest while in call cusp the sustainable, on the WisdomTree

Operator

Craig first our comes Instructions] Suisse. from Siegenthaler Credit [Operator question from

open. is line Your

Craig Siegenthaler

to technology just I wanted on start the business.

aggregate is aren't consolidated client revenues or if business still touch to of new sales results activity, yet, any as in like know including AdvisorEngine below any data terms ownership points XX%, number had wanted color see is but WisdomTree's the how performing we you of the I points? on So

Jon Steinberg

Global that. Yes, Distribution have Kurt thanks on Craig. going We're to touch MacAlpine, Head of

Kurt MacAlpine

gives AdvisorEngine we've to that so platform in to industry. be the we best invested in the feedback strong. believe us Greg, and This on feedback the platform what the overall on technology the very confidence continues

firms and assets. that across remember, relationships combined probably industry advisors now through with $XXX Junxure XX,XXX closed AdvisorEngine have of business which January account in in network AdvisorEngine for across As the billion over you'll with we Junxure we X,XXX the transaction

WisdomTree and of place the our in months sales course now manner. on past the development at over integrated active team that the already client also adopting are we're has really as in series a We're So and have adopted selected a AdvisorEngine been very management of of clients platform team investment it, alongside the few where the [indiscernible] either contracts a very owner offering. have process AdvisorEngine and their collaborating of have signed or a already we

jointly but the industry have we're pipeline prospects overall days of of definitely still through seeing we're is together. as business, the kind very and So we're early that of results in some digital promising selling earlier a rich very

Craig Siegenthaler

HEDJ your fixed the has income inflows these Who and Is then ETFs? the retail? and USFR been also hedge biggest ETFs funds, rising since RAA's, on including of Kurt buyer it recent Thanks products. rate interest rate the

Kurt MacAlpine

again Craig. is with channel. obviously success, we've tends be RAA primarily in primary the relationships. has it been independents a product and wirehouses the resonating The Kurt to far from extremely very well. It's channel from The buyer It so theme but RAA's strong had well, is the as some diversification historical

Operator

you. Thank

next Our Katz from question Bill from Citi. comes

Your line is open.

Brian Wu

on Katz. the taking for Bill This you for is question. Thank Wu Brian

of think the You recent to about announced Anyway of how impact party number third incremental relationship quantify opportunity the distribution of the wins. we should partnership this and cost.

Kurt MacAlpine

Kurt It's again.

the partnerships. and talk back step just So about to strategic

cutting various range in industry forefront on of and we're that the firms that of deals edge relationships we the of with. strategic types you've we're So seen kind the entering into the believe of of the

in flows a So to for over us on long it only a been have partnerships have a firm. a These these material, contributor despite little being the net market the really demonstrated material a year. end

give in get break we're of what that deals attributing after from to of we partnerships to terms those that you out going types we've them. conducted the But we not. more don't it of to So bit versus look sense a specifically and little of just

So simplify, two partnerships. types there's there's really really to of

today. that firms one are have we're The actively ETFs first or already firms using partnering is that where advisors platforms with

these platforms and of that custody as firms ETFs. heavy of RA users just think are So

advisor partnership these So think our as flow material reducing friction the these where the the partnerships deliver generate is short about a very of a them. areas to we period of are and program we because opportunity and to can cost allowing in strategies time trading us solutions essentially

strategies this example portfolios. TD we've model our Ameritrade So both of considerable really the and results it, best from and a individual of is as probably realized result our

second we're type of yet ETFs. going that to after partnerships have The embrace that with are fully firms

these of like dealers as platforms. broker think So independent or retail

the think huge as a So just education using are than today. is great ETFs ETF we there's great, not for But the our solutions these potential greater program. probably component those strategies structure, the if advisor and and on both

potential but these we take will do is the little realize same. bit these feel So that a the the longer to results, for

Amit Muni

it, that's revenue assets side arrangement of based from And we upon of on a these the growth cost do partnerships. have sharing

advisory You it way we're see guidance modeling our income it can of on and about statement of to sort as that giving is a around, our about think X% fees it. think

Brian Wu

on helpful you of some and transparent based How on opportunity launch of ETFs the proposition vehicle. a there? from it funds, value to differs follow-up. active index provide just and Very long-term color can bit the The that

Jeremy Schwartz

This is of Research. Jeremy Schwartz, Global Head

more through value, Alpha done years heavily, ago that strategies index to So increasingly with approach to these than we've managing We're add we're our add is valuation trying we But dividends Alpha trying not earnings, the higher making XX to will by think volatility that certainly and relevant, add the very differentiate beta. to out trying ever increasingly market risk. emphasize pushing Modern active and further even to we're Alpha curve from value products. and

of waiting. lot Multi-Factor. have international of So the ETFs two a think and index in the in we going been strategies qualitative type funds recent being XXX active do after points the a volatility into launched XXX we world little right very more in much going, and cap months basis our a Markets this share. There's These active broad base holistic example allowing, really XX% markets the have emerging basis points is Emerging marketplace These here where develop multi-factor it's over just next ago more are it's than assessment in other so markets generation pure bit unique fashion. in

Jon Steinberg

These of trends spot you we my of go decade. if that our sustain of how And types sort that are sort business. of showed the to CAGR and pricing the for back next pricing of or funds sweet these slide

Brian Wu

you very Thank much. Great.

Operator

Thank you.

from Stanley. Cyprys question comes Morgan next from Our Michael

open. is line Your

Michael Cyprys

on around the little if some places Japan if us you moves. update Canada, just curious initiatives. the around in you about bit that going initiatives curious, to world the world and where and can you place, Just a spoke go update on just international about just have some us Europe, thinking other making you're you're next

Kurt MacAlpine

acquisition have the Sure, you listed so Obviously tour in of had where you foothold so products in the Europe, two as the here, we Canada we years ETF around there. it's we're kind kind in world quick about locally in in at, strengthened US, Kurt MacAlpine different three give just to And it of mentioned listed well. really products as a securities locally the for markets. launched ago

get products the of either In but distribution three proprietary through distributing where essentially We're positioning markets global strategic today. distribution in ourselves or opportunity alliances of, partnerships. of terms or our through these we're in front to XX% our own wealth

in us on market have So and the is partnership partnership we the across we is newer distribution also large markets have as partnership offices. and most Israel a in fast us, to for America distribution well. then Australia in for have Zealand and nature, in partnership a a front and where critical addition New then relationship limited Latin have Asia we growing we around a which

Jon Steinberg

are just not else And listed new US, locally we a market because is anything there's just and now Europe horizon. sure launching products Canada. for right starting I'm where clarity, a don't we which anticipate, on

Michael Cyprys

right? that so would markets you're where products product US you regions other the is three Got in just going those have is and it local listed okay, with

Jon Steinberg

investor, was to the get overtime tax the will usage efficiencies structure [ph] the structure become predominant international of structure. ETF in they USID non-US important investor on the that so WisdomTree, securities is for fact, because the usage the and and US why

So important it's an incredibly franchise.

Michael Cyprys

M&A could securities Got it, thinking M&A. additional helpful you AUM distribution as more in terms it about you're come any and here, is or you've just then be strategically. acquisition. of on How more that then is M&A capabilities so you're as thinking that thinking the ETF could increasing on are ETFs okay scale follow-up sort of of about an left that about technology, and done from anything or sort there

Amit Muni

can focus to that we technology on, so are Yes very, our our Amit. its very also just product the getting Mike diversify think you offering interested off and what particularly out that wealth. expand different asset classes, rattled building we technology areas or I areas around solutions, digital either

We dry but but powder think on making the is right focus have securities I sure and ears now it, our the We always inwards. is out, acquisitions for focus our that's properly integrated. right more looking eyes keep ETF now will really our

Jon Steinberg

Really growth. focused organic on

Michael Cyprys

it. Got

any Okay dry about point. at of powder potential as quantification M&A for thinking you're it some

Amit Muni

allocating ETF internal about capital, we have is between we now we capital Right piece and think just of the the balance We the is, capital powder for securities on we investments our paying shareholders, to took to acquisition part to growth. have with. as happy try remaining it that when the down dry and the of balance make that returning we're kind debt

Michael Cyprys

you. Okay, thank

Operator

Thank you.

Roy from Our question Deutsche from comes next Melinda Bank.

open. is line Your

Melinda Roy

activity you equity maybe a sense versus for filling market in the recent This your give talk and Brian retail of is Bedell. just Roy franchise just has investors? volatility performed maybe and institutional week, in net selling how given buy Melinda us last the for about Could

Amit Muni

as Jeremy if this the give down I'll break some that you but for some a just little of have on region. globally, outflows week but and you We a of I'll performance, $XXX by bit basis. at about about you you then week look had numbers market if the net maybe million talk

coming income predominantly HEDJ you in If DXJ flows US of that it the strategy. positive $XXX our fixed was in out was well in about as had commodity outflows we really backed $XXX the and themes actually from million US, which as and were million

so we example that particular product a the here's overall more our did Securities So why to balance acquisition of had mix. we ETF

Jeremy Schwartz

to that. little just more Yes a add bit color to

AUM is X%. than equity really So just XX% in less down, almost are the down and markets October our

gold from really October whole firm. active over seen rising to You've you so X% of in saw hedging base the

franchise But acquisition showing momentum platform risk up equity strategies [indiscernible] even from value has diversifying lot through it's oriented growth shown further for so the our solution really strong equity very certainly gold incredibly and October. performance been how in well that a your beta a a AUM. which our had so relative is on we global just it's even market market, market October, equity You on of in been have our performing

the overall we're think I seeing that. from so good And opportunities

Jon Steinberg

I In strategies. we performance unfavorable that fact, if We about should the last. XX, XX-year had back US backdrop more talking than XX-year against reverse mean slide for if Jeremy a look into strong was next the expect you to go the where better very these would equity numbers very the

Operator

you. Thank

Our Shutler Chris comes from next from question William Blair.

Your line is open.

Chris Shutler

pretty lot some good Some of launches, back traction a think really August, like these have I gotten Multi-Factor ETFs of of seem those products. have Multi-Factor types ton strategies into industry-wide don't general, spec long-term in feature a In It to-date. product intriguing potential. would ETFs

that's to at maybe think talk expect about case guessing level, you just a evolve? the you why So I'm that and category why

Jeremy Schwartz

much evolution more I into think also these our positioning are as very active Yes, we of I part mean product.

XX% to So - active, active are a quality much true this we just factor you active share currency range is, of value high a the these specific and is varying factor. so We and Modern factor. don't it one talk of lot empathize, incorporating about Alpha share off broader start including

educate way year the equity down is people a we like really at that in launch compounding with foreign are strong industry currencies this first have very risk loses. strong that. their doing by and betting [ph] trying The foreign currencies un-computated dynamic of be example currency you risk are so still maybe that, X%, and X%, in Dollar we're conviction that XXXX, people the shouldn't on something be the program currency hedge is So one only the back to we'll the

the by that's in XX% in have can markets on we stuff. to one going much fell multi-factors [ph] real-time hedged and that, these emerging are just currency volatility of lower as believe seeing EM multi-factor, off, We're the the what's But the today. factor these happening we're focusing You currency help.

future unique And ETF set of funds it's we're and so positioned. is believe active, for strong the more a getting we really through that

Jon Steinberg

Also a about Jeremy Alt volatility. maybe little bit and liquid the

Jeremy Schwartz

Yes the fee I leader a is sort think brought We category. from that's We mean areas business also what's at great the so our has with we're with Long/Short we alternatives, that option PUTW But over which European the one a Europe we're we and Alt, there's going all had family $XX in well. in we're the [indiscernible] going and certainly very first different XXXX launched fund highest in options US coming. rise to with the And of so and that of fund forefront volatility at and few we're to Dynamic forefront more of suite, in as for this the we there be happening performance us doing strong option rates they PUTW the believe writing of quick the we're in Russell volatility, standpoint, when is very a supporting writing. ETFs sweet. options more the US. in very with launch in launched million in European We the the

Chris Shutler

Okay, thanks.

us you give the I how by by have time-to-time like I'm coming interested recent you from? if two to were big Just one exclude think have flows Any you channel. been more just an AUM on talked AUM on changes you update from particularly channel. stats channels currency Can AUM the that the the that by And products, hedged Amit about channel.

Amit Muni

overall bit maybe but been side little me too the mix give RAA little bit color more change up down So higher bit that. the bit Chris much a little ask of let a maybe on on Kurt say, around there's in institutional side, not to I'd a little or a a

Kurt MacAlpine

and I really the change or and channel. magnifies DXJ emphasizes that adoption that channel, diversified with have flows Yes strength the that in RAA see exclude very look those flows of relationships have think when you platforms. of you strategic When a the RAA's biggest and it we you broad is deep really set HEDJ, very across very we will within

adding up see HEDJ that think the set be will you removing between factor. or DXJ I only would and the

Chris Shutler

you like and us AUM is sense channel RAA some give Can today? of the what

Kurt MacAlpine

particular like don't in much basis. changed granularity. from a Chris as that it hasn't We give that But breakdown percentage that

Chris Shutler

Okay, thank you.

Operator

you. Thank

from Carrier next Bank comes question Michael of Our from America.

Unidentified Analyst

is Jeff of questions Mike, asked, been most one This filling just in for but the cost. have annual on my

you As $X last realize you're quarter. this think called guys quarter, expecting I to million out

to was that if numbers curios just sense are a case, So what trying just get quarter? of the this

Amit Muni

local Remember going If with our quarter, Those our coming the what get that at you instead the shifted compensation. marketing in mostly partners be Premier the in office. from team around with you we flow that can and see own partnership results closing we our to us Japan distribution look will identified through numbers this down coming strategy The all efficiencies savings see of cost into Asia. this quarter. quarter savings next with you'll

had about talked in on costs we that we're with the call. last yes those savings So track

Unidentified Analyst

you. thank Okay,

Operator

Thank you.

question Our from Brennan from comes next UBS. Hawken

open. is line Your

Brennan Hawken

that great. you But is that of up ETF to I accelerate? overall So might a know you for disappointing to specific do pretty anything mentioned you given quarter-to-date the do growth expectations picked which Europe region and because [indiscernible]. the was foresee attribute has especially that been that What in impact has

Jon Steinberg

even restrained than the States down have no The Europe are It's where United the flows in lot. in a been flows right. Jon, you're more

BREXIT in market lot but to think investors that has has like I to a one seems do just it have market some certain then issues money the uncertainty, you uncertainty of with European just then to elections be frozen. have volatility and the uncertainty, market heightened Europe like

ETFs completely in in market short-term for like our the very quickly are undiminished, just States think prospects So but gets expressed the in sentiment I United long-term ETFs.

Brennan Hawken

Okay, that's fair.

risk So maybe [indiscernible]. the structure geopolitical other basically kind of factored some trumping market to of

Jon Steinberg

innovation market structure exactly right. The stuff

Brennan Hawken

Yes that's fair.

pressure to under of We've verses fee also comments sense is now. your And appreciate mixed want a cut? proposition rate just Jon. the how a value fee for rate get to Okay that and or seen much try about couple years the fee

Jon Steinberg

average mix very So basis lowered from I like would almost an very and small something say were almost very, it's some billion funds it's XX question emerging mix, at some all of on all for HEDJ, mix. selectively fees DXJ in AUM. market that But we $XX your points. had It's

Brennan Hawken

lower So any change. parallel flow to change that is you fee a believe and to that to would reason? some for then we're where reason follow-up think are to that reason there to active the Do have is, in might think world, do as what the somewhat seeing you any products continuing

Jon Steinberg

So I'm have your of let up. waiting years been the since question, is beta momentum have perfect not nuance but almost the first the The a market. me strategy. sure Cap nine that been markets quite the say last straight up of election

execute has their all very not So it's important most we but one strong, performance return. but to fee know the been is hard after though number fee,

you historical proposition in do versus a positive against positive you structure that and the structure. it value a three then and proposition we're the If have growing have we beta value doing is

not we is two your historically It's pricing on and they fee just rely I need that rely most wouldn't' we're raises done, because we've not, does, months three spoke component just basis revenue necessarily versus All XXX, in So our about and lowering are maybe forward say products. mean, adding about going very - forward. the they Jeremy our innovation but rates. very of volatility. points where in I and the than XXX strong more of to heavily or they what fees really pricing lower feeling competitors it growth guarantee going had

of DFA advisors very really like the and XX% track of and the advisors that in it's to business. getting to side, after starting them DFA it their from WisdomTree book embrace firms go and us and what's trying fantastic to allowing feel asking to some making and all to distribution with occurred products people XX% to or innovative are launch we of take Alpha indexing good is them we So continue do I all land of have our have ETF these on Modern longest performance record doing and for

So the we're positioning. very optimistic about

Brennan Hawken

the Thanks color all Jon. for

Amit Muni

is those business what advisors doing been did, and better is the kind [indiscernible] then and marrying We've of the last Kurt's those up today. better well. going briefly. way they and didn't that years really advisors We it for the with have our really [indiscernible] taking some against different at had really business level we've in firms funds XX same competing model of on that but - package that Really, performance

Brennan Hawken

so Thanks guys. much

Operator

Thank you.

Keith from from comes question Research. next Our Housum Northcoast

Your line is open.

Keith Housum

expect the there any on part are might you or restructuring you perhaps was it's brought expense. little what lowest there in us on understand quarters [indiscernible] provide onetime several compensation of Obviously number if for a efforts than perhaps that of I quarter. and bit color next that but sustainable spend down that, Question the lower was

Amit Muni

Where year we think about give guidance that be the moves of half. it end lower range. based the the US side down expect we that lower our around lower in of that's be to the of will to driving what's upon So performance XX we when to all first. today we in XX really We range full compensation it's [indiscernible] the the it end sit around and gave that, guidance

Keith Housum

with guys specifics some if new on the RA's. terms perhaps follow-up cover [indiscernible] can just about XX% a understand can't success give in you the of have or numbers, independent one partnerships distribution having you relationships. I talk quarter-over-quarter with I you you're that Okay, but lots could

Kurt MacAlpine

here there's again. So really, Kurt it's

after. custody the and relationships a way, advisors. better in trading, reducing within with of So more that data of front in getting platforms there's the of the types RAA There's strategic really cost two the going getting type those friction associated channel relationships we're accessing

performing contributor. has high to a very very us proven for business and significant be it that So

there very, accessing created that growth level is very. advisors we're The So way those are twofold. sales team. once One through our we've access

and books launched the performance do we strategic alongside a RAA's the standpoint working for an more the program, we're Jon Modern with So Jeremy comment around advisors to how product advisors performance the solutions the we're made from on partnerships that XX% a that. of approach touched have being XX% relationships. Alpha establishing deeper we've with. of to establishing objective go

to program legacy use and think of the to us the performance displace product kind DFA with advisor a I start has narrowing allowed So relationships. of the solutions

eliminated WisdomTree. have relationships we scaled or either can handful with those So favor now with building relationships firms types a of of of that back count in DFA

the to effort. marketing our The second though is piece that digital allows us do partnerships through

these So that nature data the have because after. going type because on in targeted both the with we we of have we're better and terms better RAA's platform access particular selling We extremely can advisors. our digital of efforts

portfolio to the portfolio tailored investment on be which open planning tend is particular into and align We portfolios building those digital service. all example very their very Beta that an of ideas be more in around a one or heavy or RAA's with thematic can that centric around blending role efforts messaging that focusing sentiment. play architecture market initiative construction, for client our as those unique around Alpha So are portfolio model

of but So strong probably a not very number those and has coming the showing two been it's very, we're growth kind really specific different areas.

Keith Housum

the you. I color. Great Thank appreciate

Operator

Thank you.

question from comes Gabelli. next Mac Sykes Our from

Your line open. is

Mac Sykes

two have questions, actually say upfront. just but I them I'll

you We have do the a of using going approach ago, years recent the take can it five [indiscernible]? perspective maybe yearend you secondly, not see to where for it the then it was do out how [indiscernible] to provide higher seasonality parse platforms. of volatility, little mono way and some of penetration just Is sort given options will the like any market effect portfolio now model the growing where advisors heard there some

Kurt MacAlpine

it the over turn take I'll and here. the Kurt question for second first one. It's I'll then

So on the model front. portfolio

year. we commercializing model portfolios So just last our began

a really construction launched first we an of have kind for we quarter to this the [indiscernible] ourselves year. top and quarter services have internally. our set providing actually got the has fourth having on the for the in only while models portfolio while execution of that exceeded expectations available through marketplace from been perspective adoption So The

when Beta we portfolios that say about we think are So planning on kind you - focused will of well and there. our open - our We model from into financial that's and it's or advisors looking bit about expectations. given and for slightly one services part Alpha the blending and met client well typically and portfolio I'd little do people the a you the function have think there accessing a that's the outsourcing investment of and done architecture partner figured exceeded the

that really and area portfolio tactical playing where these the this [indiscernible] think And construction. some with that are active outperforming we're those and of models. thematic resonating I really relative to are role advisors our expectations

class. funders selecting we opting use They actually particular has had I'd individual for there been an the suffer. originally strategy one And of our were say or growth So of significantly tactical to asset or instead thematic models. the expectations, above

Jon Steinberg

it's incredibly smart it's point, marriage and frustrating the of the one standpoint. just slow from has street and broad integrated business only into of being now just sort how beta embraced advisor beta And books really of

a been see education we've you're for you been a stream this doing starting to first it's So long and main period for XX quarter. now years go know the

The were to other and forward. expect asking what going volatility of point I guess lows sort about you for

accelerate stabilize to go, to mid-term I and predict it's half, forward, clarity to the elections second how the regardless in having but hard markets flows going flows just think will the but predict. the some allow hard that of it's they So

Mac Sykes

Thank you.

Operator

Morgan a from you. we Cyprys follow-up Thank do Stanley. from Michael And have

open. Your line is

Michael Cyprys

thoughts like annualized into Just right going came forward. the quarter $XX way be $X is which XXXX? about up question income we on international million the as go - just that profitability thinking million to in about operating that segment of that It's on the the that curios your

Amit Muni

obviously at even it, Bill, and way you're going to levels by driven that's structure cost you all think whenever just assume okay see flows. on been these I at of looking AUM the it's

Michael Cyprys

Okay, thanks.

Operator

no line. from Thank you. And our I'm showing phone further questions

for Jon to turn remarks. closing the to like now I'd So any conference back Steinberg over

Jon Steinberg

and you want you attention thank your to and quarter. next time morning to we'll you. this for just speak Thank I all

Operator

participating Ladies disconnect. today's conclude conference. and does wonderful may all and for the gentlemen, day. you a in program have thank This you Everyone

WisdomTree (WT) 26 Oct 182018 Q3 Earnings call transcript