WisdomTree has launched a new fund in the US providing exposure to companies operating platform business models.
Jeremy Schwartz, Global Head of Research at WisdomTree.
The WisdomTree Modern Tech Platforms Fund (PLAT US) has been listed on NYSE Arca and comes with an expense ratio of 0.45%.
WisdomTree defines a modern technology platform as a company with a non-linear, multi-sided business model focused on creating value by facilitating interactions between two or more interdependent groups through technology.
According to the issuer, platform businesses may enjoy several benefits including scale advantages, capital efficiency, network effects, and higher profitability margins.
“Platform-based businesses are gaining market share at the expense of traditional, linear businesses and doing so with much better scale economics and long-term profitability figures,” said Jeremy Schwartz, WisdomTree EVP and Global Head of Research. “Platform businesses are transforming value chains and we believe the breadth of opportunity expands far beyond great technology companies like Google, Amazon, Microsoft, and Apple.”
Methodology
The fund is linked to the proprietary WisdomTree Modern Tech Platforms Index. Eligible companies must be listed on either US or European stock exchanges (although they may be domiciled anywhere globally) and have market capitalizations greater than $2 billion and average daily traded values of at least $1 million.
The methodology screens for firms generating significant revenue from business lines active in modern platforms or digital marketplaces based on several factors such as business model, customer or participant relationship, and revenue source.
The index is equally weighted and rebalanced annually. There are currently 69 stocks in the index which includes firms operating platforms related to payments, social networking, gaming, communication, and content and development.
Stocks from the US account for nearly two-thirds (63.1%) of the total index weight, with the next largest country exposures being China (15.9%) and Germany (4.6%).
Media & entertainment companies make up a third (34.3%) of the index weight, followed by firms in the retailing (20.3%), software & services (13.8%), and diversified financials (13.8%) industries.