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New Look, Lower Fee For A Potent Platform ETF

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New Look, Lower Fee For A Potent Platform ETF

The WisdomTree Modern Tech Platforms Fund debuted in May 2019 with a relevant, unique idea: provide investors with exposure to platform-based companies, such as Teladoc Health (NYSE: TDOC) and Apple (NASDAQ: AAPL).

What Happened: The strategy is sound as highlighted by a 12-month gain of 34.44%, but many investors are missing out on the power of platforms under this umbrella. Perhaps some changes will catch investors' attention, because the fund is proving to be a winner.

The fund is now the WisdomTree Growth Leaders Fund (NYSE: PLAT) and tracks the WisdomTree Growth Leaders Index, which provides a greater emphasis on domestic stocks. For cost-conscious investors, PLAT is now more attractive with an annual fee of 0.2%, or $20 on a $10,000 investment, down from 0.45%.

Why It's Important: In addition to the cosmetic enhancement of the lower fee, which is indeed important for long-term investors, WisdomTree is making other enhancements to PLAT that could bolster performance, including an even deeper emphasis on growth by requiring member firms to have revenue growth of at least 7%.

“The new WisdomTree Growth Leaders Fund has companies with historical three-year sales growth rates that are more than double those of companies in the traditional S&P 500 and Russell 1000 Growth indexes, besides sharing four of the same top five holdings,” according to a research note published by the firm.

It would be easy to assume PLAT is a tech-heavy ETF, but it's not because traits such as the network and platform potency are sector- and industry-agnostic.

In fact, PLAT's technology weight is just 19.34%, below both communication services and consumer discretionary.

“Platform businesses aim to create value by connecting interdependent groups (e.g., Uber connects a rider with a driver), while traditional businesses create value through linear production or supply (e.g., Ford or Hertz produce/buy cars for sale/rent),” according to WisdomTree.

What's Next: PLAT's new, lower fee is obviously eye-catching, but the methodology change is surprising given the performance of the fund. After all, PLAT hit an all-time high Monday.

That said, adding an additional growth layer at a time when growth shows no signs of relenting against value could be rewarding.

Speaking of growth, the three-year compound annual growth rate of revenue for PLAT companies is 29.9%, according to issuer data. That's well above the percentages for members of the Nasdaq-100 and S&P 500 indexes.

 

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