WisdomTree Enters 401(k) Market

October 12, 2007

SAN DIEGO (ETFguide.com) - Despite the growing popularity of exchange-traded funds (ETFs), one place they have yet to gain traction is with 401(k) retirement plans. But that could change.

This week WisdomTree Investments unveiled a 401(k) platform that uses its own fundamentally weighted ETFs along with other investment options.

According to the company, the new 401(k) plan will consist of two key options: A "Model Plan" and a "Custom Plan."

The "Model Plan" is a wrap-fee ETF 401(k) turnkey solution that offers six professionally built ETF portfolios attuned to investors' risk tolerance or target retirement date.  The models feature ETFs from WisdomTree as well as Vanguard and iShares.  Additionally, advisors can supplement the ETF models with a menu of no-load, non-12b-1 mutual funds.

The "Custom Plan" features all of the investment options available in the Model Plan and allows advisors who can assume more fiduciary responsibility for their clients to create customized portfolios.

WisdomTree isn't the only investment provider targeting the lucrative retirement plans business.

Competing companies such as BenefitStreet and InvestNRetire are also attempting to crack the $2 trillion mutual fund dominated 401(k) market with various versions of ETF(k) plans.

"The inclusion of ETFs in 401(k) plans - the staple of the vast majority of American retirement portfolios - is a logical next step for these products," commented  Arthur Levitt, Senior Advisor to WisdomTree Investments and former Chairman of the Securities and Exchange Commission. "Along with other advocates of investor protection in our marketplace, I see ETFs revolutionizing the way 401(k) plans are assembled and operated in terms of transparency, low fees and broader selection of available investments."

With regard to cost, the firm plans to charge 65 to 70 basis points for its 401(k) solution.

WisdomTree's CEO Jonathan Steinberg said, "We are excited to introduce this new 401(k) platform at a time when the 401(k) market is poised for a transformation."  He concluded, "With emphasis being placed on fees and transparency, we believe the timing is perfect."  

Currently, WisdomTree offers a suite of 38 domestic, international and industry sector ETFs index weighted by various financial fundamentals such as earnings and dividends.