Good day, ladies and gentlemen, and welcome to the WisdomTree Q4 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. It is now my pleasure to hand the conference over to Mr. Jason Weyeneth, Director of Investor Relations. Sir, you may begin.

Thank you. Good morning. Before we begin, I'd like to reference our legal disclaimer available in today's presentation. This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. A number of factors could cause actual results to differ materially from the results discussed in forward-looking statements, including, but not limited to, the risks set forth in this presentation and in the Risk Factors section of WisdomTree's annual report on Form 10-K for the year ended December 31, 2016. WisdomTree assumes no duty and does not undertake to update any forward-looking statements. Now it's my pleasure to turn the call over to WisdomTree's CFO, Amit Muni.

Thank you, Jason, and good morning, everyone. Most of our operating data is already known, so I'll quickly go through the important items for the quarter, discuss recent flow diversification trends, and provide some guidance on how we're thinking about 2018. I'll then turn the call over to Kurt MacAlpine, our Global Head of Distribution for comments around some key initiatives, before Jono will make some closing remarks and we open the call to Q&A. Beginning on Slide 3, our U.S. AUM grew to $46.8 billion at the end of the fourth quarter, primarily due to positive market movement. The U.S. dollar's continued decline versus the euro drove significant outflows from HEDJ that largely offset flows in our other ETF categories, as the middle chart shows. The chart on the right reflects our flows x HEDJ and DXJ, which total $1.1 billion for the quarter. The strongest quarterly result in 5 years and that strength has continued through January. Turning to the next slide, we can dig into where we are seeing flow strength. During the quarter, we saw a continued strong demand for our U.S. -- for our non-U.S. small cap strategies which had aggregate inflows of $435 million. Our suite of domestic fixed income ETF had their strongest quarter ever with $179 million of inflows driven by AGGY, which continues to build an impressive performance track record versus passive benchmarks and the most sophisticated active managers. During the fourth quarter, the dollar/yen was fairly stable and sentiment briefly improved towards Japan. WisdomTree took a $0.94 out of every dollar that went into the currency hedged Japan theme. This illustrates that the flow challenges we had with DXJ and HEDJ are market sentiment driven and when sentiment turns, we lead the flows given our competitive strength in the currency…

Good morning, everyone. As Amit has mentioned, excluding DXJ and HEDJ, our net flows and the diversification of those flows have picked up considerably in the last 4 months. Since October 1, we bought in $2.1 billion in net new money across 56 of our ETFs, with no one hot category or categories driving the majority of the flows. We believe this step-change increase can be attributed in part to the rollout of our adviser solutions program, which was officially released in late September 2017. You've heard a lot over the last few quarters about the strategic spend, within distribution, and we wanted to provide you with some visibility into the new solutions program that we built with this investments. When we launched the effort to build the program, we did it with 2 primary objectives in mind. First, we wanted to make it easier for our clients and prospects to do business with us; and second, we wanted to build deeper relationships with advisers and platforms that expand beyond providing product ideas. In building the program, we wanted to ensure that what we designed was differentiated relative to anything else available. To achieve this, we developed a new program in collaboration with our best clients and prospects and focused it on the most relevant challenges or headwind they're facing in their business today. What they told was that they needed our help and support with 8 things. So starting from the top with evolve the client experience. First, they need to evolve how they're working with their clients and offer an experience that better incorporates technology as a core part of their offering. Second, they're struggling to increase share of wallet with their existing clients and are looking for ways to create additional capacity in their practice, so they…

Thank you. Good morning, everyone. We had an incredible year-end. The combination of the announced ETF Securities acquisition in November, the launch of our solutions program in September, the distribution relationship with TD Ameritrade in October and AdvisorEngine's acquisition of Junxure at the end of December, makes the word transformative the appropriate descriptor for 2017. When ETF securities of deal closes in the next couple of months, WisdomTree will have immediate scale in Europe with nearly $20 billion of assets under management and $100 million of run rate revenues. Our European business will have been transformed and since Europe is the second largest and the second most important ETF market in the world, WETF will have been transformed. We'll also have succeeded in materially diversifying our business and reducing concentration risks. While the deal hasn't yet closed, clear benefits would have been seen over the past few months as the U.S. dollar slid to multiyear lows and gold prices and other commodities have rallied. It seems our timing couldn't have been better. As global growth is expected to accelerate in a synchronized manner for the first time in many years, I expect demand for commodity ETPs to increase, making this transaction even more attractive. In addition to the strong strategic merits of the deal, it will be at least $0.11 accretive in the first 12 months. Taking the strategic and financial merits of the deal together, this was the best transaction done in the ETF space since BlackRock bought iShares. Turning to Slide 12. While we are excited about the diversification benefits of the ETF Securities transaction, other investments we've made in recent years around products and distribution, are driving broader organic growth here in the United States. I want to reiterate some of the points made by both Amit…

[Operator Instructions] And our first question will come from line of Craig Siegenthaler with Crédit Suisse.

So just wanted to start on AdvisorEngine. Should we expect to see the first set of flows and wins really show up in ETF AUM in 2018, so this year? Or do you think it's more better have a conservative assumption, more like 2019?

To -- I would think you'll see some in -- and you will see some in '18 and it'll accelerate over time, for sure. I mean, AdvisorEngine, sort of, around their traction and growth, engagement in reaction to the platform has been incredible. And also reaction from the industry, from the adviser industry to the Junxure transaction has been incredibly positive. But it is a long sales cycle and the efforts by their team and it is a small team, to buy Junxure and to negotiate with WisdomTree took considerable resources. But Junxure is significantly larger from a revenue standpoint than AdvisorEngine, and the cross-selling should just lead to faster organic growth. And then Junxure, which should also lead to model opportunities for WisdomTree, even away from AdvisorEngine. So all in totality should grow this year and accelerate over time.

Got it. And I wanted to follow-up on China and your emerging market products. And we noticed China ex State-Owned is having a really good run here and also the index behind S&P 500 China is also on a good run. Is your sales team seeing better traction on the EM suite and really China specifically? And are there additional opportunities to add these products to platforms like we saw with some of the wins with Ameritrade?

This is Luciano. Let me answer the first question, and I would just say absolutely, we're see a lot of interest in EM broadly. We're seeing interest in China and those 2 particular funds, really, we think are extremely unique in the industry. China ex State-Owned enterprises is really beta for China, removing the risk of state ownership. And as you mentioned, that saw significant flows in 2017 from a very low base. We recently launched the China 500, along with -- based on the S&P China 500 index. And that in effect is beta for China. That's the broadest China exposure that exists, it includes both H-shares and A-shares and as China becomes a bigger part of global market cap and folks need to allocate in a greater way to China, that could be the go-to fund to get broad beta exposure to the Chinese equity market. So we're very excited about both of them and that's -- and I would say we're very excited about broad emerging markets, ex-State-Owned enterprises as well which beat the MSCI Emerging Market Index last year by 1,000 basis points. And people are just starting to discover that fund, XSOE.

And then Craig, on the second part of your question, it's Kurt MacAlpine here. Around the placement of these funds on different platforms. So the ex State-owned Enterprise suites is and has been present on many platforms, which is part of the reason you've seen strong adoption recently. And as of yesterday, we just placed the S&P China 500 on the TD Ameritrade platform for commission-free trading. So as you know, that fund just launched in December. The asset base is growing nicely, the trading volumes are quite strong, so we anticipate that we will continue to gain traction on a variety of platforms as that fund grows.

And let me just add -- so, a couple of thing. So first, the China 500 is the first true beta fund ever launched. You can't say any of the ETFs, based on any of the other indexes is true beta, they're way too narrow to be considered beta. So again, if you're going to do beta, you have to be first, so it's very exciting. The speed with which the fund has opened on its trading and has created, is faster than most launches that we've ever had. We've said to you, it's not often that it's -- not often about year 1, but years 2, 3 and 4, but this is certainly off to an incredibly fast start. And then earlier in my prepared remarks, I spoked about vintages. And not only are you seeing China 500, which was launched just a couple of weeks ago or ex State-Owned Enterprises, emerging market funds, a couple of years ago, but also DEM and DGS are also strongly creating as well. So that's what I was referring to in the sheer breadth of what we're doing and it's very encouraging, particularly from a fee standpoint and a fee-compression standpoint to see both historically powerful funds at the firm and new funds at the firm creating at the same time. So thanks for your question.

And our next question will come from the line of Bill Katz with Citigroup.

Just a quick question on the pending ETF Securities. Jono, you mentioned that you said about $0.11 accretion, I was just sort of looking back at what you had said at the time of the transaction. And maybe it’s a mixing apples and oranges, which could very well be. But it still shows $0.09. So I guess a couple of questions around that, is one, what is the -- I think you're using the similar level of assets versus what's in there today, so am I just mishearing? Or is there a little bit of subtle shift in the guidance?

Bill, it's on it. No, there's no change in guidance. The numbers that we gave was the 12-month number, as opposed to the 2018 calendar year amount. So there's been no change in the guidance from when we announced the transaction. We'll give updated guidance after the transaction closes. Probably at the first quarter call.

Got it. But that is based on then AUM, not today's AUM -- that guidance, correct?

That's correct.

Okay, and then just big picture question, Jono, thanks for the -- sort of longer-term forecast on flows. And so to do the quick math again maybe this is a little rounded as well. But looks like you had about 1% market share in aggregate in your U.S. Business versus some of these flows, the $4- to $6-somewhat billion you mentioned for the industry. How do you think about the incremental growth for your franchise against some of the market share assumptions you've laid out in prior calls? Is there an incremental catalyst here that you think could potentially close the gap versus what we've seen more recently?

Yes. So, one, I know that's answered both with -- we've seen massive headwinds with DXJ and HEDJ. So that in absolute numbers are masking lots of potential, but taking that out, still you need to see significant growth beyond that to match the targets that I've laid out for the firm. I am encouraged by the leverage that we're seeing on some of the platforms and the tools. It is still very early days. There's also -- when you marry sort of data with our digital marketing, another point of great leverage and a lot of these are just starting to hit. One of the things that we tried to do on this call, because we've had so much activity in the recent -- just in the recent past, we -- a lot of this we -- was repeated, but we wanted you to have a better sense of all in the totality that we're doing. We're definitely feeling that the efforts that we have undertaken over the last couple of years, whether it's around new products, and so just to take market share and we're still growing in early things. If you want to do better in the next 10 years than in the prior 10 years, domestic fixed income would be a good category to contribute more. So there is from the products standpoint, things like that, we're excited about that and the liquid alts. I mean, yesterday we just launched Russell 2000 PutWrite complement the S&P 500 PutWrite to go into the suite of liquid alts that we've been launching. Another relatively new category. And these funds, they take some time to establish. I mean, one thing I've said to this group before and one of the changes over the past decade is the difficulty it is to launch a new fund. And -- but we are starting to see very broad participation from many of the new funds over the last 1, 2, 3, 4 years. And then just the technology. I think that you have a real chance to see additional leverage as these tools are being rolled out, as our sales team and our market team are taking full advantage and our clients are learning how to interact with us and them in a new way. But net of it all, I'm in no way backing off of the past guidance. So I've said in the past, something like 5% of the flows or more, which would translate, I think, into something like 10% of the revenues of the flow or more. And that's still the business plan, the business model and the aspirational goals of the firm.

And our next question will come from the line of Surinder Thind with Jefferies.

I'd like to start with a question on AdvisorEngine. Obviously, it appears that there's good reason to be optimistic about some of the investments that you're making. Can you maybe help me provide some color around, or understand, the one-year option to buy out the remaining stake. Why one year? Why not something longer, 3 years? What could be the delta versus maybe having to spot out the remaining stake at this point, versus waiting a year, or having the option to wait a year?

Thank you for your question. One, as one of the analysts that also follows investment, this is a really relevant story for you, and we think this has the chance to be, sort of, an investment on a new tech stack for the future. So as a small firm, and WisdomTree is larger than AdvisorEngine, but significantly smaller than, let's say, a BlackRock. It's not as easy as for us to put a start-up through our income statement. So we have to be creative in how we do this. We think peak losses are in 2018 and so the option allows us to avoid most of the losses and certainly the losses for 2018 and we think that it gets better on a going-forward basis after that. In terms of a longer-term option, we didn't control it. You are dealing with shareholders and management teams at AdvisorEngine and it's not an easy thing for them to understand. They partnered with us, we're working well together, but they've now agreed to sell themselves at our discretion and actually don't get the benefit of the liquidity of that. And so it's just a balance. If you could have had an infinite options, that would be better, but I think it was really quite creative and flexible with the entrepreneurs that we're dealing with and sensitive to our public company shareholders and we're quite sophisticated in terms of sort of corporate financing structuring as either the ETF Securities deal represented or AdvisorEngine Junxure represented. So we're trying to be fair to every party involved but it isn't easy being an asset manager offsides who are trying to compete with BlackRock and Vanguard.

Understood. That's actually very helpful. And then perhaps, a question or two for Amit here, some modeling items. Amit, you provided some really good color around the so-called one-time items around the comp expense in the quarter. Any color around how much of that was being pulled forward with the stock-based comp. And then the other question related to that is, I think in the past you've also decided to use more cash or change the cash and stock-based comp mix. And so I think this is the second time that you guys have done that. Maybe any color there around just how you guys think about stock-based comp, in general, going forward, and if this is a new mix level to think about?

Sure. So I would say, we've changed the mix, as you noted back in 2016. We did it again in '17. It's usually when things become unusual, right? As I mentioned in 2016, because of our result, the bonus pools, were so low that we had to shift more into cash. In 2017, the reason we did it, it was more of just managing our expense base for future periods, so we felt it was better to take the expense in now. But I think, in a normal environment, I wouldn't expect to see any sort of shifting like that. So I would expect to maintain sort of, as you've seen, sort of historically how we sort of had it at a steady mix. As far as the -- how much we accelerated, if we did not accelerate or change that mix, we would have been within the guidance that we gave at the beginning of the year. So really that's the piece that took us over above the 31% top end of the guidance range. As far as the acceleration of the stock awards, that was about roughly $600,000, we shifted from January to December.

Understood. And then one final question, just kind of a more of a big picture item. In terms of you guys just talked about, recently launching new product and stuff. How should we think about the pipeline going forward at this point? Obviously, a lot of investment has been made and a lot of products were launched, as Jono, you noted a few years back, and are beginning to get traction and stuff. But how should we think about this year and your outlook for the pipeline?

So Amit gave some guidance about 6 to 8 funds for the year, I think we've done 3 already. We have -- and I'm feeling very, very good about our -- talked about the prowess -- I can't tell you how excited I am for the liquid alts and the fixed income. Our creativity seems to be undiminished, so I feel really good about it. Now we run in cycles, so we launch funds, every once in a while, we close funds. We try to keep a healthy mix. And I think really nothing has changed. We've been very efficient and disciplined since we launched the firm in 2000 -- I'm sorry, in 2006 and I think we'll continue. But I would say, this remains -- you guys always ask us about competition. It is hard for the rest of the industry to keep pace with WisdomTree. We recently made some forays into -- more aggressive forays into active ETFs. You're going to see us do more in those spaces as well. So again, really one of the great core strengths of the firm.

And our next question will come from the line of Michael Carrier with Bank of America.

This is Jeff filling in for Mike. Just one thing on the International segment losses. I guess, when will those be deductible, if you could remind us on that?

So that will become deductible, once those businesses turn profitable. Then we'll be able to recognize the NOLs that we've been accumulating on them. So it's just a matter of timing. So we're driving those businesses on a standalone basis to get to profitability as soon as they can.

And Amit...

With the -- then obviously, with the ETF Securities transaction, the holistic International segment becomes profitable, but we have to look at each one of those International businesses on a discrete basis.

And what business were you referring to as not profitable?

Our existing European business -- our existing European platform.

And our next question will come from the line of Robert Lee with KBW.

Maybe going back to Advisor Solutions. Maybe, this is -- Jono, following up the comment you made before. Can you maybe help us understand a little bit how Advisor Solutions is different from some of the other things. I mean, INVESCO, it acquired this Jemstep which targets the adviser market, in addition to Envestnet, MSCI who's been in the adviser market for many years and has a new platform. So I'm just trying to get a sense competitively how you kind of think of Advisor Solutions versus some of those others that are targeting with a similar strategy -- the same marketplace?

Just to clarify and question it. It's Kurt MacAlpine here. Are you more referring to AdvisorEngine, relative to Jemstep or the totality of the solutions program?

Well, really just more of the technology and being able to capture that adviser and sign them up. I mean, it seems like many of your competitors are also trying to use technology to drive delivery of their models as well.

So, okay. So here I think you're really talking more about AdvisorEngine, which is a subset of the full solutions program. So AdvisorEngine, let's just taking it against Jemstep and against Envestnet. So Jemstep or even a future adviser is more about Robo. And AdvisorEngine is a much broader -- it's really the full digital platform, all the way from prospecting to billing, including Robo. And Robo is one of the more important aspects that got WisdomTree excited, because that's allows us to sort of be the easy button for our model portfolios. But Robo itself is not what the AdvisorEngine is. AdvisorEngine is more than Envestnet, but built on a new tech stack and the technology enhancements today on tech built in the last year or 2 versus -- Envestnet, they were visionary, but they started in the late 1980s and it creates its own legacy issues, which really are not that flexible and scalable. And so we do think there's a tremendous opportunity to compete with them, as we hear from their client base, frustration in the usability and the intuitiveness of that tech and then from the asset ETF sponsors who have gotten into Robo, they're only competing with the sliver of what we're going for.

Okay. And then maybe a follow-up question just on the pending transaction. Just kind of curious, any change in thought about how we should think about the financing of it? Or your expectation for paying down this debt once it comes on, just given changes in taxes going forward? And maybe, as a second part of that, are there any tax benefits? I'm assuming maybe there's some tax-deductible goodwill that will be created with this?

So we're currently looking at how we are going to be structuring the transaction to optimize the taxes around. We are waiting some clarification on all the tax reform rules that were going on. So when we close the transaction, we'll talk more about that, how that would affect the tax rate. And as far as how we're financing the transaction, it's still the same combination of debt and cash in our balance sheet, as well as 30 million shares of stock that we'll be giving to the ETF Security shareholders.

And our next question will come from the line of Mac Sykes with Gabelli.

I know you list your percentage of flows versus the industry, but we also know the bulk of the industry flows are going into more commoditized beta products. Is there any way to parse out your flows away from the local me-too products? And how should we think about that industry growth rate, in terms of coming from smart beta, more differentiated solutions? Is that faster at this point than the overall ETF trends?

And if Kurt or Amit -- Kurt or Luc want to add to this both. Like I would is you've always had incredibly strong beta in the marketplace from when we launched, the largest ETF sponsors in the world had always been a part of the business and they've always taken very, very strong market share. Nothing has really changed in the dynamic of beta versus alternatives. The most important number is, from an investor standpoint is the active fee returns. We have a history of creating value. We're seeing lots of funds, both historically and new are creating value. You are seeing the adviser get more sophisticated in what they are demanding from their models and from their exposures and their learning that it's not just active mutual funds or beta ETFs that are the choice that they have. We've spent a tremendous amount of time over the last decade educating on modern alpha and how -- and now we are really educating on how you incorporate it into your portfolio. And I've given you numbers of growth -- market share expectations and revenues of market share flows versus the industry and there's always going to be an opportunity for those funds that create value. And they'll come in cycles, it won't be a straight line where either beta is doing exponentially better, or even smart beta is doing exponentially better. But one point of leverage on the side of smart beta is there's an educational process taking place right now. I mean, the first models ever to come out that marry beta and smart beta have only just recently started to come to the marketplace. So I'm very encouraged about our side of the business. And then on the other side, let me say, WisdomTree had some beta, china 500 is beta, floating-rate treasuries is beta. So we have chosen to play in the beta space, when we can be first. So anyway, we're competing for the whole pie. Yes, Kurt?

Just one other thing as well, just to tie it back to the solutions program, AdvisorEngine, the data investments that we're making is. One of the things that we found, because the majority of our products are alpha-generating strategies is -- the single driver or single most important driver or barrier to our flows is us being -- having platforms and avenues to get in front of advisers. And we found from the industry as many other firms have found that you can have 2 to 3 quality investment conversations a year on products, but when you start to marry those product with industry-leading technology, with adviser solutions, with world-leading academics, we believe that we're increasing and we're seeing this in our activities, but we are -- these tools are allowing us to go deeper with advisers. When we go deeper with advisers, we have more forms in front of them to share investment process and methodologies. And we believe quite strongly that, that's leading to better flows and part of the driver of the uptick that you've seen from October onward.

And I would just add. This is Luciano, that we're late in the economic cycle. And this is typically a time when you see beta and momentum outperforming as factors. So it shouldn't surprise people that huge flows are going into beta, if you look at beta as an actual factor. The nice thing about WisdomTree is that we give you exposure to other factors that can also come into play with different parts of the cycle. And so I would say that the key take away for me is how much money is actually coming into the ETF industry. And the fact that it's coming into low-feed beta is great, because eventually the money that's in low-feed beta will also need to go other places, because there's risks to being 100% beta, 100% of the time.

And you've done a nice job with the TD relationship in the ETFs, and we've heard from them, especially in the last call that how they're really embracing social media platforms and trading through Facebook et cetera. Have you talked -- I don't think I've seen or seen any iteration of this, but maybe you can just talk about sort of how you're thinking about embracing social media, getting on the platforms and some of your digital engagements as well?

So I think -- I guess if the question is about the marketing efforts more broadly. I think there's really two benefits to apply from like a TD, which is also true for a Schwab or a Monex or a Questrade in other markets. So one is that it allows us to reduce the friction of doing business with advisers, so we do hear from some advisers that one of the pain points of the cost of trading, the complexities around rebalancing. So in the example of a thing like TD, we're not only able to offer 74 commission-free funds, but we also have the only 7 named commission-free models on the TD platform. So in terms of how we're accessing advisers, it's a combination of our distribution, our wholesale sales efforts, our investment strategy and model teams and also our marketing efforts, which are a combination of advertising, digital and social media engagement. So I would say, social for WisdomTree is really been a very strong suit for us. If you look at the number of followers that we have on Twitter, LinkedIn, YouTube and things like that, I mean, we're on the absolute kind of top end, top decile of the industry and it is definitely platforms that we're using to engage advisers. But I'd say it's just part of a broader marketing and distribution effort that we're bringing to the market.

And our next question will come from the line of Chris Shutler with William Blair.

First, I want to get your thoughts on the new factor classification system and factor box being rolled out by MSCI and BlackRock. Is that something that you would support or that you think is a good thing for the industry? Just wanted to get your thoughts there?

Yes. This is Luciano again. And anything that increases awareness and education around factors, I think, is a net plus for WisdomTree. We are -- actually were marketing over a year ago, this notion of moving away from the Morningstar style boxes towards the 5 major smart beta factors. So that's actually been a key part of our investment strategy and marketing message for the last year. It doesn't surprise us that other folks are following in that direction now. And we think it's interesting that a lot of the innovation is being led by index providers who were predominantly all cap weighted a decade ago. We view their coming into the space really is a validation of what we saw over a decade ago. And that's just going to accelerate the learning curve and make modern alpha as a third option, a much more predominant trend going forward.

Okay. And then the only other one, in the adviser channel, could you give us a sense of much of the AUM today in that channel you believe is in kind of the home office models versus individual SA selecting the funds? I know you may not have perfect data, but just sort of a rough sense. And what products do you have the most -- have the most AUM that are in-home office models today?

So in terms of our asset mix, there's really 2 types of models. If you think about the home office, there's the full discretionary models, where they're doing the large trades. And then there's a lot of the paper guidance models as well. I would say that, kind of, as Jono had mentioned before, historically, a lot of the models have been overly simplistic, or they're just beta models or they are just legacy alpha models using mutual funds. We've started to see a pretty large shift away from this mindset towards a more modern mindset, which is blending beta -- smart beta in modern alpha. And we're showing quite well in those areas. So it's more of a nascent part of the marketplace today, but WisdomTree has given our history, our track record, our experience in this space had some pretty strong placement. What we're waiting to see now is these platforms and these models really drive adoption throughout the field and how advisers start to use them more frequently. In terms of our DXJ and HEDJ in particular, where these are often seen as the defaults or are seen as the default currency hedge funds in their category. Those are the funds that you see most predominantly in the models -- in the legacy models today, so despite the fact that those models were only beta-focused, they had opted to use DXJ and HEDJ as the core allocations in those models. And in instances where currency hedging is still present in those models, we are still present with those exposures.

And our next question will come from the line of Alex Blostein with Goldman Sachs.

This is actually Ryan Bailey filling in for Alex. So firstly, what I wanted to ask about was this quarter, it seems that more energy was focused on your U.S. Business ex-DXJ and HEDJ, in terms of flows, at least. So what I'm wondering is, beyond 2018, how do you think about DXJ and HEDJ as a percentage of AUM? And considering those forms have typically had pretty high incremental margins, how might that change WisdomTree's overall profitability?

So I'll talk about it from -- those franchises, the DXJ and HEDJ franchises are incredibly important to WisdomTree. In the first part of the fourth quarter, you had some -- a momentary burst of positive investment sentiment towards currency hedged Japan, and as Amit referenced in his opening remarks, we took almost 95% of the flow into the category. So in moments where the currency, the dollar is strong and Japan or Europe are in favor, we think that those will be growing streams and AUMs and contributors to margin and when they are not, they'll be detractors, while -- and that's what they've been detractors. The reason that we made such a great emphasis to talk about the ex-DXJ and HEDJ this particular quarter was really the -- to really just try to bring attention to the sheer step change in breadth of funds creating on a daily basis, which we think as really an early indicator of maybe great potential, I mean, for those who have been following WisdomTree for a long time. Bill Katz, you followed us when we were a pink sheet stock. So in 2008, when the world's coming to an end and the firms trading at $0.50 a share and WisdomTree had $800 million of flows, that was maybe the thing to keep your eye on that could have been the indicator of future growth and greatness which I fell we have sort of demonstrated over the last 9 or 10 years. As I look today and though the world's not coming to an end, but you're seeing a collapse in the dollar, our largest exposures are taking it on the chin, we're seeing something very extraordinary that we feel is tied to the recent efforts around solutions and models and other things and it feels to me that there's a similarity between those 2 types of metrics. I feel incredibly good about what we're going -- what we're doing. But if we're not -- but what I would also stress to you is, don't discount the value of our franchise-leading funds.

Understood. And then I guess, maybe 2 quick modeling questions, Amit. As we think about the $4.5 million of transaction-related costs, how should we split those across expense items? I'm guessing it's mainly comp, but maybe there was something in G&A? And then based on a prior question, should we take it as a $19 million of accretion from ETF Security to 2018 doesn't have any benefit from, I guess, tax savings?

Sure. So the $4.5 million is all in professional fees, so those are just advisers that we paid in connection with the 2 transactions. And as far as the accretion, that is an after-tax number, so it does include any of the tax benefit that we would get.

And our next question will come from the line of Bren Hawken with UBS.

First, just a cleanup question, and apologies if you hit on this, but the tax rate guide, does that include the impact of stock-based comp? And if so, what would that impact be?

It does take into account stock-based comp, but remember if it -- because of the new rules around stock-based comp, we gave information and if you look at the supplemental appendix, it has the historicals, as the future stock-based comp that we have vesting and the potential tax hits that's related to that. We did take into account assuming a little bit of that in the tax and the tax guidance that we gave, but if you just follow that information, you should be able to then keep track of that and any incremental tax hits because of that.

Okay, so we should refer to the appendix and that the guide is basically excluding that. I'm not really sure because you said you took into account a little bit of it, so I was trying to...

We assumed a little bit of it, but the best thing to do is just look at that supplement and then we can talk at the end of every quarter on sort of what that tax impact will be since it's already public.

Fair enough. Then last one from me. You guys obviously spoke to the comp based -- the stock-based comp acceleration in 4Q, which makes a lot of sense given tax-yield implications. But I believe you also said that you increased the incentive pool in 4Q based on milestones. So I was just hoping to -- if you could maybe walk through some of those, obviously, one of them was pulling off the best deals since PGI, but if you could maybe put a final point on some of those milestones, that'd be great.

I mean the really guys, that was -- I gave you a summary of all of the big highlights that we used. I mean, that would be the biggest one, but we -- the TD, the Junxure AdvisorEngine plus the ETF Securities. Really those are the points that this team deserves to be rewarded for.

And our next question will come from the line of Keith Housum with Northcoast Research.

Two housekeeping items. The ETF Securities transaction, I noticed in your start you had targeted to realize $5 million of identified cost synergies, is any of that included in your $19 million benefit that you expect in 2018?

Yes, it is.

Okay, all of it is?

Yes.

Okay. Got it. Can just to remind us as I switch gears over to AdvisorEngine, if I remember right, you guys expect AdvisorEngine to primarily provide increased distribution in AUM, but also as a potential to get revenue from the model since such a [indiscernible], so as you think about AdvisorEngine, can you provide a little more, I guess, color or how should we be thinking about that in terms of '18, what happens of the options ex [indiscernible] in '19, is there any type of scope you can give us around that.

Sure. So as a business -- as Jono talked about how AdvisorEngine is going to -- it's scaling, it's a long-term effort that we have, so as soon as that -- with the Junxure acquisition there, ability to scale will be enhanced by that, so we would expect to see, over time, the model start to take traction and then we will start to see some revenue coming in from that. When we did exercise the option, we would consolidate AdvisorEngine and so we wouldn't have, obviously, any of that revenue string, it all would just be included as part of our total revenues.

Got you. Is there any way that -- do you think it's a $1 million or a $10 million opportunity, is there any type of scope you can provide us?

No, we're not giving any guidance on that right now.

Ladies and gentlemen, this is all the time we have for questions today. So now at this time, I'll hand the conference back over to Mr. Jonathan Steinberg, WisdomTree's Chief Executive Officer for some closing comments or remarks.

Just want to thank all of you for your time and interest and I will speak to you next quarter. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude our program and we may all disconnect. Everybody, have a wonderful day.