Objective Equity Commentary Goes Biased: WisdomTree's New Hires

Last June, I posted a piece on Jeremy Siegel's Wall Street Journal editorial concerning "new" index funds. At the time, he simply noted that he developed them 'with' private concern WisdomTree Asset Management. According to the ad I saw on CNBC this afternoon, Siegel and former hedge-fund manager Michael Steinhardt have joined the firm.

For what it's worth, I recall Steinhardt liquidating his fund because he was having trouble generating performance for his investors, and preferred to spend more time on his coin (?) collection.

In any case, back to WisdomTree. From the WSJ piece back in June, it seemed that what Siegel has decided is that you can decide for yourself what features you want in a fund, tweak some existing benchmark to be more like that, and then call that group a fundamentally-based index. Siegel's apparent objective is to reduce index volatility.

That's nice, but it still misses the point. Indices have as their objective the descriptive measurement of a specific group of equities, usually representing the economy, or a sector thereof.

In fact, what Siegel and his colleagues have done is simply created some new, quasi-passively managed mutual funds. They are trying to position them as "indices" in order, I suppose, to compare their return/risk with an index such as the S&P500, and look better. There's nothing wrong with forming a new mutual fund company and launching a new, cleverly-designed fund approach. But let's not call it indexing, when it's apparently just passively managed.

I guess this means it's the end of Jeremy Siegel as an objective observer of equity markets. Everyone has his price, and WisdomTree finally must have met Jeremy's.