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 it’s very different from paying basis points on growth of assets. It’s just a flat fee, so it’s 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 doesn’t actually touch the money. We’re 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 it’s a nonevent." 

Edited by: HFD


Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE