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Wisdomtree Investments Inc (NASDAQ:WETF)
Q3 2019 Earnings Call
Oct 25, 2019, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the WisdomTree Q3 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jason Weyeneth, Director of Investor Relations. Please go ahead, sir.

Jason Weyeneth -- Director of Investor Relations

Thank you. Good morning. Before we begin, I'd like to reference our legal disclaimer available in today's presentation. This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. A number of factors could cause actual results to differ materially from the results discussed in forward-looking statements, including, but not limited to, the risks set forth in this presentation and in the Risk Factors section of WisdomTree's Annual Report on Form 10-K for the year ended December 31, 2018. WisdomTree assumes no duty and does not undertake to update any forward-looking statements.

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

Amit Muni -- Executive Vice President and Chief Financial Officer

Thank you, Jason, and good morning, everyone. I'll quickly walk through the important items for the quarter, and then turn the call over to Jono before we open the lines for Q&A.

So beginning on Slide 3. Assets under management were a little changed at $60 billion as modest market appreciation was offset by net outflows. We had $670 million of net outflows in the quarter, driven by continued outflows from DXJ and HEDJ and a large client outflow of roughly $900 million from USFR. Excluding HEDJ and DXJ, flows were roughly breakeven.

Some highlights for our flows this quarter. In emerging markets, the industry overall experienced outflows for the second straight quarter. However, we continue to see demand across our EM product suite, in particular our small-cap products and ex-state-owned enterprises fund XSOE, which has now crossed $500 million in assets.

On the domestic equity side, we continue to generate consistent inflows, with the third quarter representing the eighth consecutive quarter of inflows. We continue to have success, scaling our domestic fixed-income platform from just under $1 billion at the beginning of 2018 to almost $4 billion today.

Our yield-enhanced aggregate bond fund, AGGY, generated inflows of over $200 million, the third consecutive quarter of inflows. With AUM of roughly $1 billion and an impressive track record, the fund is very well positioned for the current market environment.

And lastly, we continued to generate strong flows into our commodity-based products which was led by the strength of our European gold and other precious metals, which generated inflows of $734 million in the quarter across gold, silver and platinum. Our year-to-date flow market share remains strong at roughly 26% for gold and 65% for other precious metals.

Continuing with Europe, as you can see on the next slide, this quarter, we completed our rebranding and product rationalization post the ETF Securities' transaction last year. We closed 192 products, representing a net $125 million of AUM and renamed all the funds under the WisdomTree brand. With this now complete, as you can see in the chart on this slide, we now offer one of the most innovative ranges of ETFs in Europe and are well positioned to grow in the -- our overall platform.

Now turning to the financial results on Slide 5. Revenues were just under $68 million, up 2% for the quarter, driven by higher average AUM, partially offset by lower revenue capture due to AUM mix shift. On a GAAP basis, we had net income of $4.2 million or $0.02 per share. Excluding non-operating items, adjusted net income was $10.6 million or $0.06 a share. The primary difference between GAAP and adjusted results this quarter was a $6 million after-tax non-cash charge for our future gold commitment payments, reflecting the increase in gold prices during the quarter.

Turning to margins on the next slide. Our adjusted operating margin was 24% for the quarter, which was up nearly 4 percentage points from the second quarter. Gross margins for our US segment were 80.8%, up 50 basis points sequentially, reflecting the benefit of our previously discussed vendor renegotiations. We continue to expect gross margins in the US of 80% to 81% at similar asset levels.

Gross margins for our International segment expanded over 3 percentage points sequentially, driven by the growth in average AUM, as well as the benefit of vendor renegotiations. We continue to expect gross margins in the International segment of 70% to 72% but closer to the higher end of the range.

On the next slide, you can see the change in our expenses. For the US segment, operating expenses remained well controlled. Compensation is trending within the full-year guidance range we gave at the beginning of the year. And barring a meaningful change in our results or the market environment, we would expect fourth quarter compensation at similar levels. The decline in third-party distribution costs reflects the benefits from a -- from renegotiated fees that took effect during the quarter. While we anticipated a modest seasonal increase in marketing and sales spending into year-end, we expect the full-year result to be at or below our prior-year $40 million guidance.

International segment expenses decreased 3%, excluding AUM-driven costs, partially reflecting the seasonal slowdown in sales and marketing activity.

Now turning to Slide 8. Regarding our revenue sharing relationships with the online brokers, fees we pay to Schwab, TD and E*TRADE made up approximately 50% or $700,000 of the third-party revenue sharing costs this quarter. As a reminder, these fees are to support commission-free trading of our ETFs and data packages to aid our distribution efforts. As a result of these platforms eliminating commissions for ETFs, we expect to realize savings in the $500,000 to $700,000 range in the fourth quarter. We are in discussions with these platforms regarding how they may evolve their programs and potential fees going forward.

Now, I'd like to turn the call over to Jono.

Jonathan Steinberg -- Founder and Chief Executive Officer

Thank you, Amit, and good morning, everyone. As you know, beginning in October of 2017, we signed numerous distribution agreements that allow our funds to trade commission-free, also providing us with valuable data to drive better distribution effectiveness. Earlier this month, several of the largest RIA custodian platforms announced their decisions to eliminate commissions for ETFs. This is clearly a positive development for WisdomTree. While we do lose the exclusivity we enjoyed on some of these platforms, as Amit mentioned, there will be a significant and immediate reduction in third-party distribution expenses. Also the move to commission-free trading for all creates opportunities at other platforms where we were previously disadvantaged. Particularly exciting is the opportunity at Fidelity, the second largest RIA custodian.

We are now better positioned than at any other time to target advisors who custody there. We expect Fidelity to be a more significant contributor to our growth going forward. Finally, the elimination of commissions for ETFs should drive accelerated adoption of the ETF structure. And as a pure-play ETF asset manager, this is very positive for us.

Switching gears, model portfolios remains an area of continued focus and investment for us. In September, we announced the hiring of Scott Welch as the CIO of Model Portfolios. In this newly created role, Scott will lead our asset allocation team and investment committee. Scott brings significant expertise in asset allocation from his prior role as CIO of Dynasty Financial Partners, a large outsourced solutions provider to RIAs.

We're also enhancing our relationship with Professor Jeremy Siegel and have recently begun developing and collaborating on model portfolios. Professor Siegel is our original solutions expert, and since our launch as a firm has always been closely associated with WisdomTree. This deepening of our working relationship is very exciting and could prove to be very meaningful to model flows in the future.

Before we take your questions, I'd like to just take a moment to publicly thank Michael Steinhardt, who retired from the Board earlier this week after serving 15 years as WisdomTree's Chairman. Michael's vision and insights have been invaluable to WisdomTree's transformation from a research company in 2004 to a globally diversified performance-oriented asset manager we are today. I wish him the very best in retirement.

Thank you for your interest in WisdomTree, and we'd be happy to take your questions now.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Craig Siegenthaler with Credit Suisse. You may proceed with your question.

Craig Siegenthaler -- Credit Suisse -- Analyst

Thanks. Good morning, Jono, Amit.

Amit Muni -- Executive Vice President and Chief Financial Officer

Morning Craig.

Jonathan Steinberg -- Founder and Chief Executive Officer

Good morning.

Craig Siegenthaler -- Credit Suisse -- Analyst

Do you have a view on if the commission-free ETF trading and fractional share trading will actually open the door to more direct index investing and if this could actually provide a new source of competition for the ETF vehicle?

Jonathan Steinberg -- Founder and Chief Executive Officer

So, I don't have a strong opinion on that at the moment. I've seen how some people have referenced it for the 401(k) market, but I don't think -- well, I just don't know how that will evolve. And I also think creating your sort of baskets feels more like it's a self-directed trading vehicle versus a asset management competition, but -- so I don't have a strong opinion on that particular question at the moment really.

Craig Siegenthaler -- Credit Suisse -- Analyst

Okay. Just as my follow-up here, the -- in similar topic though, but the second-largest ETF manager in the world didn't pay shelf fees before. So looks like this could really level the playing field for them across all platforms. Just [Technical Issues] have any thoughts on that trend, because you could see heavier competition coming from that manager?

Jonathan Steinberg -- Founder and Chief Executive Officer

So, you know they've always been -- even though them -- even though they've always been included on every platform, they really haven't been excluded, the consumer demand for it has forced the advisor to incorporate them into their executions of models from the very beginning. It certainly will help them a little bit I guess in commoditized beta where they may no longer be the lowest fee competitor, but I'm not sure it changes the dynamic for lowest fee beta dramatically.

Craig Siegenthaler -- Credit Suisse -- Analyst

Thank you, Jono.

Operator

Thank you. Our next question comes from Dan Fannon with Jefferies. You may proceed with your question.

James Steele -- Jefferies -- Analyst

Good morning. This is actually James Steele filling in for Dan. So just curious on -- it seems as though throughout the quarter, sentiment toward European equities seem to improve quite a bit and absolute performance for HEDJ remained strong. So -- and quarter-to-date, things have kind of turned up in terms of flows. So just curious if there's kind of an improving outlook there or any conversations that you're having with clients that could indicate HEDJ is kind of reaching a trough here?

Jeremy Schwartz -- Executive Vice President and Global Head of Research

Yeah. Hi, this is Jeremy Schwartz, Global Head of Research. I mean certainly you pointed out the performance has been incredibly strong both year-to-date and really over the long run. We remain very committed to currency hedging both in HEDJ across the broader platform. HEDJ is today a five-star fund, beating basically every European fund over the last five years, but broader things like our international HEDJ, quality [Indecipherable] growth. ISDG is a five-star fund in the foreign large-cap growth category. So we think there's really opportunity still to take share from traditional unhedged in that broader category.

We keep innovating with dynamic hedging, with things like our dynamic DWM, DDWM, and DDLS, international small-cap and broad that are also five-star funds and starting to get more meaningful track record. But you're right that as trade sentiment improves, China and the US come toward a deal, whether it's any of the global-focused firms from Europe to Japan and generally emerging markets too, you're starting to see more interest in a bottoming of sentiment we believe.

Jonathan Steinberg -- Founder and Chief Executive Officer

You know -- this is Jono. We haven't really seen a change or creations in the HEDJ product. We have seen some spotty but positive flows in DXJ recently. So, maybe it shows some signal in turning up sentiment.

James Steele -- Jefferies -- Analyst

Great. Thanks. And secondly just on the third-party distribution relationships, understanding that you -- part of the relationship is some data that helps you with your distribution efforts. Just curious what the effect on that is if you'll still be receiving that? Or any update there?

Amit Muni -- Executive Vice President and Chief Financial Officer

Yeah, it's Amit. Yeah, I mean, look the platforms are still working through how they're going to evolve their programs. We do expect that there would be some sort of data package that they would still offer to us. So I would expect our fees to be -- going forward to be more of a fixed nature rather than variable as we've seen in the past.

James Steele -- Jefferies -- Analyst

Got it. Thank you.

Operator

Thank you. Our next question comes from Mike Carrier with Bank of America. You may proceed with your question.

Shaun Calnan -- Bank of America -- Analyst

Hi guys. This is actually Shaun Calnan on for Mike. Just going back to the commission-free platform, so obviously it's a benefit next quarter. But would you expect renegotiation with these platforms? And could that mean that the benefit next quarter is more temporary?

Amit Muni -- Executive Vice President and Chief Financial Officer

Hi. It's Amit. So, as I've mentioned, the platforms, they're still evolving their programs. We're in discussions with them. We don't know how it will eventually end up. So it's hard to say what they will be. I do expect there will be savings. And as I've mentioned, as a minimum, I think, we probably will be going to more of a fixed-fee scenario versus a variable fee that's tied to AUM. So I do expect it to be significantly less than what we're paying today. So I do expect some of that cost savings you see into Q4 to carry forward into 2020.

Shaun Calnan -- Bank of America -- Analyst

Got it. And then just on commodity flows, so they've been strong over the past couple of quarters, but they can be volatile at times. So are you -- are your products benefiting more from an overall industry trend with positive flows? Or is it that you're taking share from competitors?

Jonathan Steinberg -- Founder and Chief Executive Officer

Hi. This is Jono. So really we've been benefiting from interest in commodities in general. We're very strong in gold which is, like in the United States, a pretty competitive subset of the commodity category. We've been taking our flow -- our share of flow, our AUM share of flow year-to-date. When you go broader commodities, and Amit touched on this before, we have much less competition in broader metals, grains and other commodities. In some cases, the market share numbers are in the low-to-mid 90s. And so that -- it's just very, very positive commodities in general for us.

Shaun Calnan -- Bank of America -- Analyst

Okay. Thank you.

Operator

Thank you. Our next question comes from Robert Lee with KBW. You may proceed with your question.

Jeff Drezner -- KBW -- Analyst

Hi. This is Jeff Drezner on for Rob Lee. Thanks for taking my question. I just wanted to know if you can perhaps quantify the proportion of sales or flows coming from model portfolios.

Amit Muni -- Executive Vice President and Chief Financial Officer

Yeah. It's Amit. So we haven't disclosed that number at this time. Once it gets to a meaningful amount, we'll start talking to -- talking about those numbers a little bit more broadly.

Jonathan Steinberg -- Founder and Chief Executive Officer

But it's growing quickly, but off of a smaller base. It's a relatively new effort for WisdomTree, but we're excited about the refinements that we're making to those efforts with the recent announcements of Scott and Professor Siegel.

Jeff Drezner -- KBW -- Analyst

Got it. Okay. Thanks. And then if I can follow-up, with the elimination of the commissions, is that going to force perhaps more spending on advertising as it gets more crowded to be on these platforms?

Jonathan Steinberg -- Founder and Chief Executive Officer

I think that what you're left with is on how you compete. WisdomTree has got a strong brand recognition among advisors. We've got a scaled and diversified product offering with excellent track records and a highly differentiated solutions program. So we plan on winning on merit. We also support those efforts with strong data capabilities and a very targeted digital marketing. And the element, this ties to your question, the digital marketing is very easy to track from an effectiveness standpoint. And so, I think, it'll be very controlled but -- very controlled and also you'll only do it when it's effective. So I don't think it will be a meaningful increase in marketing from that standpoint, no.

Jeff Drezner -- KBW -- Analyst

Okay, great. Thank you.

Operator

Thank you. Our next question comes from Michael Cyprys with Morgan Stanley. You may proceed with your question.

Michael Cyprys -- Morgan Stanley -- Analyst

Hey, good morning. Thanks for taking the question. Just hoping to hear maybe an update on product development initiatives as you look out to 2020. Also saw in the release that look like you're cutting some products in here. If you could talk a little bit more around that and probably how you're thinking about pruning the product shelf versus areas of new development.

Jonathan Steinberg -- Founder and Chief Executive Officer

So, the pruning in Europe was just a part of our planned restructuring post merging our European business with ETF Securities. Particularly as certain costs in Europe are going up, some of those products that were very small just didn't make economic sense. And then there was also a lot of overlap between some of our products and the company that we acquired, and so that was just a natural cleaning up.

In United States, we've been very efficient in repurposing older funds as a part of our product development, as well as selectively launching newer funds. Most recently, we launched some tactical trading exposures. Most recently, our emerging cloud fund which we launched both in the United States and in Europe simultaneously, and it's been getting some nice traction very quickly out of the gate. I think you'll see some more effort around fixed income where we've had efforts over the last year, I would say. And so you'll see more there. We'll be doing some -- so anyway, we should be pretty active I think on product development. We can't get too specific because it's very competitive on a product development standpoint.

Michael Cyprys -- Morgan Stanley -- Analyst

Great. And then just maybe you could give us a little bit of an update on AdvisorEngine, I know you guys have talked a lot about that in the past, just where we stand today in terms of the assets trends on the platform there? How you're thinking about -- I know you have an option to buy and I think part or the rest of the remaining stake. How you guys are thinking about that as we look forward from here?

Jonathan Steinberg -- Founder and Chief Executive Officer

Perfect. I'm going to let Jarrett Lilien, our recently appointed President and COO, answer that question. For those of you that don't know Jarrett yet, he joined the management team two years ago as Head of Emerging Technologies. He's actually been our representative on the Board of AdvisorEngine for the last few years. And he's been with WisdomTree prior to that for eight years on our Board, WisdomTree's Board. And so we know him extremely well and he's had just a distinguished career in financial services prior to joining WisdomTree. So Jarrett, maybe you could answer that question on AE.

R. Jarrett Lilien -- President and Chief Operating Officer of WisdomTree Investments

Sure. Thanks, Jono. Our approach on AdvisorEngine is really all about optimizing not only the partnership, but our investment there and I feel very confident that we're doing both of those. In particular on AdvisorEngine, the business itself, the pipeline there remains strong. They're currently onboarding some important new customers. We've had some joint wins that have been nice to see. But really AdvisorEngine is part of our broader solutions program where we're looking for ways to really help our advisor clients be more successful. So overall, again, it's about optimizing our partnership and our investment and we're doing both.

Michael Cyprys -- Morgan Stanley -- Analyst

Okay. Thank you.

Operator

Thank you. Our next question comes from Brennan Hawken with UBS. You may proceed with your question.

Brennan Hawken -- UBS -- Analyst

Good morning. Thanks for taking the question. Just wanted to get back to the commission-free platforms. I think it was in your second quarter deck that you disclosed that the organic growth rate was about 4 times 21% trailing 12-month growth rate and that that represented about a quarter of your US AUM. So backing into rough numbers, it looks like about $2 billion in flows from those platforms. I understand that's ex-HEDJ and DXJ, but just wanted to make sure that that's reasonably the right way to think about it. And what do you think happens to that growth rate? Do you think that the existing platforms drop and then there's some kind of partial offset with Fidelity? Like, what's the way to think about that going forward? Thank you.

Jonathan Steinberg -- Founder and Chief Executive Officer

Amit, why don't you take the first part and I'll...

Amit Muni -- Executive Vice President and Chief Financial Officer

Yeah. The math you did in the numbers is correct. That's the right way of thinking about it.

Jonathan Steinberg -- Founder and Chief Executive Officer

And I guess what I would say is, we had various levels of exclusivity. And of those that have lowered or eliminated commissions on ETFs, many of them were modest to just an open playing field regardless. And so I don't think it's going to be a negative. I think that you'll get the Fidelity uptick as well as just more ETF flows in general because pretty much all lend investors know you can get access to ETFs more competitively now with less resistance and friction into the system. So I think, net-net, we expect it to be a net positive.

Brennan Hawken -- UBS -- Analyst

Okay. Okay. Thank you for that. And then a follow-up question. I know the discussions with the platforms are ongoing. Some of them have flagged in their calls that they're considering a couple different options, such as a platform fee, maybe there's a consideration of some potential rev shares for like an attractive shelf space component. I know that probably being included in that set of commission-free ETFs had a shelf space benefit before. Do you think that that might actually provide some benefits to the flows on a go-forward? Do you think that would actually be attractive for you guys? How are you thinking about that as you enter into the negotiations at this stage?

Jonathan Steinberg -- Founder and Chief Executive Officer

I think you got to -- this is Jono. I think you have to wait to see what they put forward. It's a little early to know. Certainly, because of our willingness to enter into sort of more exclusive relationships prior to them all going commission-free, we certainly are comfortable considering that, but we'll make those evaluations when we hear what they're offering. But we have to wait and see what they're doing.

Brennan Hawken -- UBS -- Analyst

Yeah. Figured, but worth a shot. Thanks, Jono.

Jonathan Steinberg -- Founder and Chief Executive Officer

You're welcome.

Operator

Thank you. Our next question comes from Keith Housum with Northcoast Research. You may proceed with your question.

Keith Housum -- Northcoast Research -- Analyst

Good morning, guys. So, with the closure of the 192 extra products over in Europe, should we expect to see a significant decrease in some of the operating expenses over in Europe?

Amit Muni -- Executive Vice President and Chief Financial Officer

It's Amit. I wouldn't say significant. We did have some -- it was net positive for us from a -- from a gross margin perspective. So that's one of the reasons why we think that gross margins will be on the slightly higher end of the range that we gave.

Keith Housum -- Northcoast Research -- Analyst

Got you.

Jonathan Steinberg -- Founder and Chief Executive Officer

And some of the expenses were sort of regulatory and anticipated to rise, and so we took action prior to that. So it would've just been worse if we hadn't, I guess, is what I'm saying.

Keith Housum -- Northcoast Research -- Analyst

Okay. Fair enough. And then following up on the question that was asked earlier about the commodity funds, you pointed out as well, fixed income has had a good year as well for you guys. Is there any sign that you guys are taking share there? Or is it kind of like a rising tide is raising all boats?

Jeremy Schwartz -- Executive Vice President and Global Head of Research

Yeah. So there's a few unique positions. We -- our fixed-income team has been calling it the WisdomTree barbell as two of our anchors of the floating rate treasury fund where we're actually the leader in floating rate treasuries, and it's sort of the shortest duration treasury product. And interestingly, with the yield curve inversions that were there for a while, it's really one of the highest-yielding treasury securities, this floating rate treasury, because there's a spread. And today it's a 30 basis point spread over T-Bills. And that's really making that an anchor at the short end sort of the cash-like type security. And at the long end, our yield-enhanced ag, AGGY that Amit talked about, both of them combined have generated over $1 billion of flows this year. And that AGGY is a five-star core Morningstar core bond fund that's increasing the yield over the traditional ag.

And so we believe those two will be -- they're gaining share. They're both very competitive offerings at the long end and the short end. And so we think that that barbell is going to resonate. And as we've been talking about model portfolios, our fixed-income model portfolios have been delivering great returns over their track records and we think those will be attractive for the whole fixed-income suite.

Keith Housum -- Northcoast Research -- Analyst

So if I summarize your answer, it sounds like in a perforated fixed income world, it sounds like you guys believe we're taking share in that space. Is that correct?

Jeremy Schwartz -- Executive Vice President and Global Head of Research

Yeah.

Keith Housum -- Northcoast Research -- Analyst

Okay.

Jeremy Schwartz -- Executive Vice President and Global Head of Research

And -- but for us product development wise, domestic fixed income has been a concerted effort over the last few years. We're relatively new in this space, so we're very pleased with the traction that we're receiving.

Keith Housum -- Northcoast Research -- Analyst

Okay. And then finally with the Fidelity relationship, just maybe you could provide a little more color on why you guys were disadvantaged. Is the fact that you guys were not in part of the commission-free platform there and now it's everybody at a level playing field?

Jonathan Steinberg -- Founder and Chief Executive Officer

Yeah. So one of the elements of commission-free trading was levels of exclusivity. So one ETF sponsor in particular had a more exclusive relationship with Fidelity than all others. And then Fidelity opened up their platform only to their mutual fund partners that had ETF sponsors and we just could not crack through it this time. We thought eventually we might have been able to, but now it's open to us, so that's why we're excited about it. And because of the sheer size of Fidelity's platform, it has the chance to be constructive. And now we can really target our solutions program to a significantly larger number of RIAs.

Keith Housum -- Northcoast Research -- Analyst

Great. Thank you.

Operator

Thank you. Our next question comes from Mac Sykes with Gabelli. You may proceed with your question.

Mac Sykes -- Gabelli -- Analyst

Good morning, everyone. Yeah. The announcement on the Cloud Fund seems well timed and also it's a terrific partner. What are your goals for the funds in the interim and strategy for marketing if different from current products?

Jeremy Schwartz -- Executive Vice President and Global Head of Research

Yeah. Mac, I think WisdomTree was very well known for our dividend, value investing and in trying to get more sort of growth-oriented products, I think, with our modern tech platform before this, and now this sort of cloud computing space. And you're absolutely right. Working with Bessemer Venture Partners who collaborated with the NASDAQ to create this index was a great partner, and we've created some content. We went to their Private Cloud 100 event and had some of their CEOs and partners on our podcast. And so it is a new space for us and we're excited about the growth potential in that space.

Jonathan Steinberg -- Founder and Chief Executive Officer

It really diversifies our product offering. You might see more in those spaces as sort of tactical trading opportunities. And I will say that marketing does play a role often in new fund launches. And so you might see some specific efforts to continue to build on the very quick momentum we got right out of the gate.

Mac Sykes -- Gabelli -- Analyst

Thank you.

Operator

Thank you. Our next question comes from Robert Lee with KBW. You may proceed with your question.

Jeff Drezner -- KBW -- Analyst

Hi, this is Jeff on for Rob again. Just had one quick follow-up. In regards to the philosophy of launching products, in the past you were essentially willing to try almost any product that didn't cost much to leave it out there for a while. Has that philosophy changed maybe due to higher cost of launching products or the fact that maybe it creates too much confusion? Will you be perhaps less willing to let products linger for a longer period of time?

Jonathan Steinberg -- Founder and Chief Executive Officer

So this is Jono. So I think, I would be a little more nuanced on the answer. We were very, very aggressive as we launched the firm. In launching product, we knew that there was lots of white space and we sought to really fill voids that existed in the market. Now you have to be just more -- they're just less, so in general that you have to be very specific. You have to have clearly defined differentiated product that can stand out in a more crowded market. We always, if we can, want differentiated product. And so, I would just say, we -- I think, we're prudent in our selection of new fund offerings.

And again, what I said earlier, we've actually repurposed a number of funds, things like taking some dynamic currency hedging and turning them into what we thought was a better execution in a multi-factor positioning. So I think that we've been very nuanced there, so that the product set as it exists today is much more efficient than it's ever been. So I feel very good about product strategy always.

Jeff Drezner -- KBW -- Analyst

Okay, great. Thanks very much.

Operator

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Jonathan Steinberg, WisdomTree CEO, for any further remarks.

Jonathan Steinberg -- Founder and Chief Executive Officer

I just want to thank everyone for your time and interest this morning, and we'll speak to you next quarter. Thank you. Have a good day.

Operator

[Operator Closing Remarks].

Duration: 33 minutes

Call participants:

Jason Weyeneth -- Director of Investor Relations

Amit Muni -- Executive Vice President and Chief Financial Officer

Jonathan Steinberg -- Founder and Chief Executive Officer

Jeremy Schwartz -- Executive Vice President and Global Head of Research

R. Jarrett Lilien -- President and Chief Operating Officer of WisdomTree Investments

Craig Siegenthaler -- Credit Suisse -- Analyst

James Steele -- Jefferies -- Analyst

Shaun Calnan -- Bank of America -- Analyst

Jeff Drezner -- KBW -- Analyst

Michael Cyprys -- Morgan Stanley -- Analyst

Brennan Hawken -- UBS -- Analyst

Keith Housum -- Northcoast Research -- Analyst

Mac Sykes -- Gabelli -- Analyst

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