| Frequent readers of this newsletter will know that the overall ETF industry celebrated a record-breaking 2024. Not every issuer attended the party, though. Case in point: WisdomTree. The firm was slapped with a downgrade to neutral this week by Northcoast Research, which cited WisdomTree's inability to attract a meaningful share of the $1 trillion funneled into US ETFs last year. Specifically, WisdomTree's US-listed lineup drew in just $1.6 billion, data compiled by Bloomberg show. On a global basis, WisdomTree suffered $500 million in outflows, according to Northcoast. Analysts Keith Housum and Rodney McFall are throwing in the towel, calling last quarter's poor fund flow results the "final straw" in their decision to cut their ratings and expectation for 2025: We have flagged our concerns about the company's ability to drive new fund flows into its ETFs throughout the year... Without a formative opinion on WisdomTree's digital efforts, we see the sidelines as the right place to be on the shares.
It's a sign of the times in the uber-competitive $14 trillion global ETF industry. As this newsletter has discussed, there's a simultaneous boom-and-bust underway: as issuers flood the space to compete for the trillions of dollars being shoveled into ETFs, standing out is an increasingly tall order. WisdomTree is just one example. While the company ranked as the 9th largest issuer as recently as 2017, it's since fallen all the way down to 15th, Housum and McFall wrote. What's curious is that WisdomTree shares have been crushing it, both on an absolute and relative basis. The stock has soared 145% higher on a total return basis over the past five years — that compares to a 129% gain for industry leader BlackRock and a pedestrian 96% return for the S&P 500. Go figure! | 
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