Wisdom Tree said it is cutting its dividend to 3 cents from 8 cents as part of the acquisition.
According to Morningstar Direct, Wisdom Tree’s ETF business has about billion in assets, making it the 13th largest of all sponsors, with 1.05% of global market share.
Funds that fail to amass much in assets are often unprofitable to run.
Related: Here’s why the ETF graveyard is getting crowded Wisdom Tree’s current product lineup includes dividend and earnings-themed products, as well as international equity and currency-hedged funds.
In a news release, Wisdom Tree said it would be buying the European exchange-traded commodity, currency and short-and-leveraged business of ETF Securities, products it said had about .6 billion in assets under management.Fund fees have gotten so low that there is little room for smaller providers to undercut the big players on cost, especially as investors increasingly focus on secondary factors like liquidity in making their investment decisions.In this environment, sponsors look to improve their market share through consolidation—in September, Invesco Ltd.Over the past three decades, 3PLs have used them for such purposes as achieving scale, broadening service offerings, expanding geographic coverage, obtaining assets and/or technology, securing management talent, acquiring new customers, increasing market share, supporting earnings growth, gaining knowledge in a targeted industry (health care, for example) and in some instances, reducing competition.The M/As have not only been used strategically by individual 3PLs to strengthen their market positions, but also were used by private equity companies to build large-scale service providers.We found that puzzling, and in our 2014 surveys we asked the CEOs why merger and acquisition activity continued to lag expectations. First, the CEOs generally saw companies they might have targeted for acquisition as being overpriced.