WisdomTree, Inc. (NYSE: WT), a global financial innovator, has launched the WisdomTree Equity Premium Income Digital Fund (token ticker: EPXC; fund ticker: WTPIX). This fund is accessible to both retail and institutional investors through the WisdomTree Prime® and WisdomTree Connect™ platforms.
The new fund aims to mirror the price and yield performance, prior to fees and expenses, of the Volos U.
S. Large Cap Target 2.5% PutWrite Index. This strategy, which involves put writing, has been employed by professional investors for decades to potentially increase yield and decrease equity return volatility across various market cycles. WisdomTree possesses experience in this sector, managing a similar product that tracks the same benchmark.
The digital fund is structured as a transparent, tokenized offering, providing potential for enhanced risk-adjusted returns when compared to the S&P 500 Index or a similar covered call strategy. It is made available to crypto-native investors and institutions, leveraging the WisdomTree Prime and WisdomTree Connect platforms. These platforms facilitate access to real-world asset (RWA) exposures within regulated frameworks without requiring off-chain operations. EPXC marks the fifteenth tokenized fund available on these platforms, broadening users’ options for yield-bearing and diversifying assets.
Will Peck, Head of Digital Assets at WisdomTree, stated, “ETFs and other 1940-Act funds have demonstrated how options overlay strategies can be made available to a wider range of investors. We’re thrilled to bring an options overlay strategy to the onchain community. EPXC is an exciting addition to our suite of tokenized funds that leverages our expertise in building intuitive funds that are designed to perform in different market conditions. The fund’s ability to generate income, reduce downside risk and manage volatility gives users choice as they execute their strategies onchain via WisdomTree Prime and WisdomTree Connect.”
EPXC is designed to generate income from premiums derived from selling put options and is structured to perform relatively well against traditional equity strategies in flat-to-down markets. The fund seeks to provide consistent income by selling put options bi-weekly on the ETF trust that tracks the S&P 500 Index, targeting a 2.5% premium. By increasing its sensitivity to equity market movements, the fund offers greater income potential, positioning it as an option for investors navigating volatile market conditions.
Jeremy Schwartz, Global Chief Investment Officer at WisdomTree, commented, “Over various market cycles, equities have historically been the primary driver of total returns – but also a leading source of risk and volatility. In this environment, EPXC offers a compelling approach for income-focused investors – substituting straight equity exposure for a strategy that captures the volatility premium in the options market to add value during turbulent times.”
The fund’s investment strategy, which involves derivatives like put options on the SPDR S&P 500 ETF Trust (SPY Puts), carries inherent risks. Derivative investments can be volatile and may be less liquid than securities, being more sensitive to economic shifts. While the fund collects premiums from the SPY Puts it writes, potential losses if the price of SPY drops below the strike price and the puts are exercised could exceed the gains from option premiums. The fund’s returns are capped by the option premiums received, meaning it will not participate in gains beyond this limitation. Risks also include those related to rolling options, potential higher capital gain distributions, and the relatively new and unregulated nature of blockchain technology, which could be vulnerable to fraud, theft, inaccessibility, or processing delays.
WisdomTree, Inc. is a global financial innovator offering exchange-traded products, models, and digital asset-related solutions. The company operates WisdomTree Connect, an institutional platform, and WisdomTree Prime, a blockchain-native digital wallet, both provided through WisdomTree Digital Movement, Inc. or WisdomTree Digital Trust Company, LLC. WisdomTree currently manages approximately $137.4 billion in assets globally.
