WETF WACC - Weighted Average Cost of Capital
The WACC of Wisdom Tree Investments Inc (WETF) is 8.8%.
| Range | Selected | |
| Cost of equity | 8.7% - 12.7% | 10.7% |
| Tax rate | 9.9% - 15.1% | 12.5% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.4% - 10.2% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 0.9 | 1.26 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.7% | 12.7% |
| Tax rate | 9.9% | 15.1% |
| Debt/Equity ratio | 0.42 | 0.42 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.4% | 10.2% |
| Selected WACC | 8.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| WETF | Wisdom Tree Investments Inc | 0.42 | 1.44 | 1.05 |
| AINV | Apollo Investment Corp | 1.69 | 1.74 | 0.7 |
| BCSF | Bain Capital Specialty Finance Inc | 1.42 | 0.56 | 0.25 |
| CGBD | TCG BDC Inc | 0.96 | 0.57 | 0.31 |
| EIT.UN.TO | Canoe EIT Income Fund | 0.1 | 1.18 | 1.08 |
| GCG.TO | Guardian Capital Group Ltd | 0.11 | 1.1 | 1.01 |
| NMFC | New Mountain Finance Corp | 1.66 | 0.41 | 0.17 |
| PZN | Pzena Investment Management Inc | 0 | 1.3 | 1.3 |
| SII.TO | Sprott Inc | 1.08 | 1.53 | 0.79 |
| TCPC | BlackRock TCP Capital Corp | 1.83 | 0.64 | 0.25 |
| Low | High | |
| Unlevered beta | 0.54 | 0.88 |
| Relevered beta | 0.85 | 1.39 |
| Adjusted relevered beta | 0.9 | 1.26 |
WETF's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for WETF:
cost_of_equity (10.70%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (0.9) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.