Image source: Company IR.
What: Shares of WisdomTree Investments, Inc. (WETF 4.47%) are down about 11% as of 3:00 p.m. EDT as global markets reel following a surprising Brexit vote.
So what: The majority of WisdomTree's fee-earning assets are concentrated in just a handful of currency-hedged ETFs, which have declined significantly in recent trading.
Since market open on Thursday, June 23, the WisdomTree International Hedged Equity ETF (HEDJ 3.02%) has lost 7%. The WisdomTree Japan Hedged Equity Fund (DXJ 2.31%) has lost about 6.8% of its value. In the first quarter, these two ETFs shed nearly $5.6 billion in combined Assets Under Management (AUM) as a result of market movements and customer outflows.
Now what: WisdomTree Investments is something of a leveraged bet on the performance of its funds, gaining and losing value at a faster pace than its ETFs under management. In the first quarter in 2016, a rout in international stocks sent AUM in its international hedged equity funds to the lowest level since the fourth quarter of 2014.
Investors worry that a Brexit-inspired decline in stock market values this quarter could further erode the manager's fee-earning assets and profitability.
