WisdomTree: ETFs in 401K?

Yesterday WisdomTree (Pink Sheets: WSDT) announced the launch of their innovative 401k platform featuring ETFs. Although ETFs have been around since the early 1990s, this is the first time they will be offered as part of any 401K plan. Under this offering, they will also make ETFs of other companies like Vanguard and iShares available along with their own. It will also feature some low-cost, no-load, no 12b-1 fees actively managed mutual funds. WisdomTree will offer two options for the 401k plan:

• The "model plan" features six professionally built ETF portfolios depending on the participant's risk tolerance appetite and target retirement date. It includes ETFs from WisdomTree, Vanguard and iShares as well as some actively traded mutual funds.
  
• The "Custom plan" lets an investor make his own choice with available ETFs/funds and create his own customized portfolio.

About WisdomTree: WisdomTree offers ETFs that are fundamentally weighted as opposed to others that are market-cap weighted. The investing principle behind the former being that ETFs should constitute weights of companies in an index depending on their core fundamentals like earnings and dividends vs. the investing principle in the latter which constitutes stocks based on their market cap.

It seems to me like WisdomTree has the first mover advantage in bringing ETFs to 401K, when the popularity of ETFs has soared in recent years. Also smart is the move to offer Vanguard and iShares ETFs as well as some actively traded funds along with its own ETFs to appeal to a broader audience. What remains to be seen is how and when corporates start offering this plan to their employees.

For the entire press release, click here.

Voluntary Disclosure: I currently own WisdomTree (Pink sheets: WSDT) shares.