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Michael Steinhardt, Chairman of WisdomTree Investments, and CEO Jonathan Steinberg spoke to Bloomberg TV about the company’s new listing on NASDAQ (NASDAQ:NDAQ). WisdomTree, which previously traded OTC, has approximately $13.1 billion in ETF assets under management.
Steinhardt said that his biggest speculative bet is “being short the 2-year Treasury” note. He also said that “we are up to our knees in midgets” when it comes to DC policymakers.
Michael Steinhardt on investing in WisdomTree:
“I do not know if I will maintain all of it over time, but I certainly will maintain most of it, perhaps all of it. It has been a great investment and it is continuing to be a good investment. When I look back on the seven years, and it has only been seven years since we met, it has been, perhaps, the best investment I have ever made.”
Steinhardt on the biggest bet he’s making now:
“My investments in WisdomTree is it the biggest relative to my total assets, but in terms of speculation, my biggest investment, if you can call it that, is being short the 2-year Treasury.”
“Most investors do not short securities. They certainly do not short Treasury bills. I am not comfortable in recommending it.”
Steinhardt on debt talks in Washington and what would make him reverse his stance on U.S. debt:
“I do not think anything happening in Washington right now will change my mind. When I think about what is happening in Washington right now, I think of the expression that was used in Wall Street a long time ago, which is that we are up to our knees in midgets. That is what I think about when I think about Washington right now, and I guess that is a terrible thing to say, but the fact that we are one week away from a pseudo- default is a reflection of the fact that Washington is less than a place of great intellectual wisdom.”
Seinhardt on George Soros exiting the hedge fund industry:
“We have already seen a fair number of high-profile exits. Most of them are not related to regulation, even though that is an issue. The hedge fund industry has come an awfully long way. I exited in 1995. Since then, there have been quite a few. You have to remember when the hedge fund industry started, it was not a business. It was something different and it attracted relatively few people who considered themselves people who could consistently achieve superior performance. Today, it is a very different business.”
Steinhardt on whether there’s a fundamental shift in what it’s like to run a hedge fund right now:
“When I was doing it, there’s a phrase we would use called ‘dis-economy of scale.’ $30 billion was inconceivable in the not too distant past. Yes, there are disadvantage in large amounts o money. Large amounts of money mean meaningfully less than $30 billion. When I was doing it, the objective was the best possible performance. The best possible performance is indeed a constrained by large amounts of money.”
Jonathan Steinberg on the importance of WisdomTree being listed on the NASDAQ:
“This is like an inflection point for the company. It allows us to raise the profile of WisdomTree, and as the first publicly traded pure play ETF sponsor, it allows us to bring attention to the ETF industry in general. The ETF industry is one of the fastest-growing segment of the financial industry. It will help us grow more quickly.”
Steinberg on where he’s seeing investors allocate capital now:
“Where we are seeing the most in flows is emerging-market debt. We have two debt funds. One of them we launched this year is the most successful new fund launched in the ETF industry year to date. It has raised more than $500 million. Another area where we have seen a lot of growth is the Brazilian currency fund (NYSE:BZF). BZF, and both of these are diversifying away from the dollar, seeking higher yields.”
Steinberg on competition from the mutual fund industry and whether WisdomTree intends to lower fee rates:
“We have a very differentiated product set. From a fee standpoint, we are already a very low fee firm, so I’m not feeling any fee pressure – but we are already competing with these firms extremely well. Last year was our best ever. We took in $3.1 billion in new money, or 2.7% of the industry’s assets. This year, we have already taken in $3.4 billion and roughly 5% of the industry’s assets. We are really thriving and competing very well today.”
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