An Unusual Way to Make Money from the Asia ETF Boom

Video Transcript

Hi, this is Tony Sagami for Uncommon Wisdom Daily.

Exchange-traded funds have become one of the most popular investment vehicles in America. Last year, investors poured $108 billion into ETFs, pushing the total assets in U.S. funds above $1 trillion!

The Vanguard Total Bond Market ETF attracted the most new money last year, at $5.1 billion, followed by the iShares iBoxx Investment Grade Corporate Bond fund, with more than $3 billion of new money.

But it’s not just American investors who love ETFs. They’re becoming extremely popular in Asia too, and South Korea is leading the way. According to the Korea Stock Exchange, investors there trade an average $711 million worth of ETFs every day. That makes Korea the fourth biggest market for ETFs in the world, behind only the United States, Germany and the United Kingdom. China is the number-two ETF market in Asia, followed by Hong Kong and Japan.

There’s no question that ETFs have become one of the most popular financial innovations in recent history. But with hundreds of ETF offerings available from dozens of different sponsors, choosing which ones to invest in can be a daunting task. For that reason, I’d recommend getting in on the trend in a different way: By betting on an ETF provider.

WisdomTree Investments is one of the biggest names in the ETF world, with 47 different funds. It pulled in more than $3 billion in the first six months of 2011, nearly equal its total haul for all of 2010. In the third quarter of last year, WisdomTree reported a 75% surge in revenues, and a whopping 97% jump in profits!

Unlike other publicly traded ETF sponsors such as BlackRock and State Street, WisdomTree is the only pure-play vehicle to profit from the growth and popularity of ETFs. The ETF businesses of most major providers are buried among their other products.

Another argument in favor of WisdomTree is its focus on Asia. Several of its most popular funds invest heavily in Asian assets, including its most recent offering, Asia Local Debt. That ETF has raised $348 million since its launch last March, and it has a beautiful balance sheet — $21 million in cash, and zero long-term debt.

Now, I’m not suggesting you run out and buy shares of WisdomTree tomorrow. As always, timing is everything, so wait for my buy signal in Asia Stock Alert. But there’s no doubt that WisdomTree is going to prosper from the explosive growth in ETF investing.

I’m Tony Sagami for Uncommon Wisdom Daily. Thanks for watching.

Tony Sagami is the editor of Blue-Chip Option Alert, a trading service designed to help investors profit from the seemingly unstoppable Asian consumption machine. He helps his subscribers tap into this potential through a variety of easy-to-execute strategies on global companies that trade on the U.S. exchanges that also do big business in Asia.

Tony is also the editor of International ETF Trader, where he shows members how to make money from trends taking place all over the world in areas like natural resources, gold, oil, commodities, tech, consumer goods and even in individual countries themselves.