WisdomTree BioRevolution ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in liquidity exposure and volatility exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm a Below Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Twist Bioscience Corp

Iovance Biotherapeutics

Blueprint Medicines

Geron

Eli Lilly

Natera

Vericel

Agios Pharmaceuticals

Fate Therapeutics

BridgeBio Pharma Inc

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. WisdomTree BioRevolution Fund earns an Above Average Process Pillar rating. The most meaningful contributor to the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The parent firm's impressive risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.3 stars, also influences the rating. Lastly, the process is limited by the turnover of management across its parent firm. The firm's asset-weighted manager tenure of three years suggests it could do more to retain portfolio managers.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the price and yield performance, before fees and expenses, of the WisdomTree BioRevolution Index (“index”).  The fund generally uses a representative sampling strategy to achieve its investment objective, meaning it generally will invest in a sample of the securities in the index whose risk, return and other characteristics resemble the risk, and return and other characteristics of the index as a whole. The index is designed to provide exposure to equity securities of exchange listed companies globally that will be significantly transformed by advancements in genetics and biotechnology. The fund is non-diversified. 

 The portfolio is overweight in basic materials and consumer defensive relative to the category average by 11.8 and 3.7 percentage points, respectively. The sectors with low exposure compared to category peers are healthcare and technology, with healthcare underweighting the average portfolio by 15.5 percentage points of assets and technology similar to the average. The portfolio is composed of 91 holdings and is less top-heavy than peers. Specifically, 24.4% of the strategy's assets are concentrated within the top 10 fund holdings, as opposed to the category average's 41.0%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 11% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Above Average

Process

WisdomTree’s team is valuable but does not stand out as one of the industry's best, warranting an Average People Pillar rating. There’s a deep bench of five managers listed on the fund. Together, they manage a total of 114 strategies, with solid long-term prospects. The strategies average a Bronze asset-weighted Morningstar Medalist Rating, indicating a position to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Average

People

WisdomTree is improving, but its shaky global fund lineup and uncertain trajectory hold its rating to Below Average. 

WisdomTree’s research organization has long been a strength. Under CIO Jeremy Schwartz, the team has generated creative, economically sound ideas and evolved them into investable products, like the efficient core series. A recent focus on investor education spawned the Portfolio Analysis Tools Hub, an online platform that taps the team’s brainpower to help investors make better investment decisions.

The firm’s product lineup is a mixed bag. To complement its core lineup of fundamentally weighted strategies, WisdomTree has recently launched funds targeting established factors instead of trendy themes—an encouraging reorientation. Yet the shutdown of WisdomTree U.S. Growth and Momentum ETF calls WisdomTree’s commitment to these funds into question, and vestiges from its laxer product-development era look ripe for closure. Its European lineup features risky trading tools that are hard for investors to use well. 

WisdomTree’s future may hinge on WisdomTree Prime, its blockchain-based digital wallet. The launch reflects founder and CEO Jonathan Steinberg’s conviction in the disruptive potential of the blockchain. Prime shouldn’t hurt WisdomTree fund investors (most funds on the platform are zero-fee), but it may distract the firm from shoring up its core offering.

Below Average

Parent

Wisdomtree BioRevolution Fund

WDNA tracks a modified equally-weighted index of companies in developed markets that focus on the advancements in genetics and biotechnology.

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