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Item 3. Quantitative and Qualitative Disclosures About Market Risk

2026-08-05 compared with 2026-05-06 · 26 added, 59 removed, 8 unchanged (91% of the section changed)

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following information, together with information

included in other parts of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, describes

key aspects of our market risk.

Market risk to us generally represents the risk

of changes in the value of our products that results from fluctuations in securities or commodity prices, the value of underlying real

assets (including farmland), foreign currency exchange rates against the U.S.

The following information, together with information included in other parts of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, describes key aspects of our market risk.

Market risk to us generally represents the risk of changes in the value of our products that results from fluctuations in securities or commodity prices, the value of underlying real assets (including farmland), the value of derivative-based investment strategies and their underlying market exposures, foreign currency exchange rates against the U.S.

dollar, and interest rates.

Nearly all our revenues are

derived from advisory agreements for the WisdomTree ETPs and other managed investment vehicles, including those acquired through the Ceres

Under these agreements, the advisory fee we receive is based on the average market value of the assets in the WisdomTree

ETP portfolios we manage and, in the case of other managed investment vehicles, on investors’ capital account balances, which are

influenced by the value of the underlying farmland assets.

Fluctuations in the value of the ETPs are common

and are generated by numerous factors such as market volatility, the global economy, inflation, changes in investor strategies and sentiment,

availability of alternative investment vehicles, domestic and foreign government regulations, emerging markets developments and others.

With respect to farmland-focused investment products, changes in farmland values may be driven by factors such as agricultural commodity

prices, farm income, interest rates, inflation expectations, land supply and demand dynamics, climate and weather conditions, and government

agricultural and environmental policies.

Accordingly, changes in any one or a combination of these factors may reduce the value of investment

securities or real assets and, in turn, the underlying AUM or investors’ capital account balances on which our revenues are earned.

These declines may cause investors to withdraw funds from our products in favor of investments that they perceive as offering greater

opportunity or lower risk, thereby compounding the impact on our revenues.

We believe challenging and volatile market conditions will

continue to be present in the foreseeable future.

Nearly all our revenues are derived from advisory agreements for the WisdomTree ETPs and other managed investment vehicles, including those acquired through the Ceres and Atlantic House acquisitions.

Under these agreements, the fees we receive are based on the average market value of the assets in the WisdomTree products we manage and, in the case of other managed investment vehicles, on investors’ capital account balances, which are influenced by the value of the underlying assets.

Fluctuations in the value of the ETPs are common and are generated by numerous factors such as market volatility, the global economy, inflation, changes in investor strategies and sentiment, availability of alternative investment vehicles, domestic and foreign government regulations, emerging markets developments and others.

With respect to farmland-focused investment products, changes in farmland values may be driven by factors such as agricultural commodity prices, farm income, interest rates, inflation expectations, land supply and demand dynamics, climate and weather conditions, and government agricultural and environmental policies.

Accordingly, changes in any one or a combination of these factors may reduce the value of investment securities or real assets and, in turn, the underlying AUM or investors’ capital account balances on which our revenues are earned.

These declines may cause investors to withdraw funds from our products in favor of investments that they perceive as offering greater opportunity or lower risk, thereby compounding the impact on our revenues.

We believe challenging and volatile market conditions will continue to be present in the foreseeable future.

Interest Rate Risk

We invest our corporate cash in short-term interest

earning assets, primarily in federal agency debt instruments, WisdomTree fixed income ETFs, U.S.

treasuries, corporate bonds, money market

instruments at a commercial bank and other financial instruments which totaled $268.2 million and $323.7 million as of December 31, 2025

and March 31, 2026, respectively.

During the three months ended March 31, 2026, we recognized losses on these financial instruments of

$0.9 million and any gains/losses recognized in the future may be material to our operating results.

We do not anticipate that changes

in interest rates will have a material impact on our financial condition or cash flows.

In addition, our Convertible Notes bear interest

at fixed rates of 3.25% for the 2026 Notes and the 2029 Notes, 4.625% for the 2030 Notes and 4.50% for the 2031 Notes.

Therefore, we have

no direct financial statement risk associated with changes in interest rates.

However, the fair value of the Convertible Notes changes

primarily when the market price of our common stock fluctuates or interest rates change.

We invest our corporate cash in short-term interest earning assets, primarily in federal agency debt instruments, WisdomTree fixed income ETFs, U.S.

treasuries, corporate bonds, money market instruments at a commercial bank and other financial instruments which totaled $268.2 million and $157.9 million as of December 31, 2025 and June 30, 2026, respectively.

During the three months ended June 30, 2026, we recognized gains on these financial instruments of $2.9 million and any gains/losses recognized in the future may be material to our operating results.

We do not anticipate that changes in interest rates will have a material impact on our financial condition or cash flows.

In addition, our Convertible Notes bear interest at fixed rates of 3.25% for the 2029 Notes, 4.625% for the 2030 Notes and 4.50% for the 2031 Notes.

Therefore, we have no direct financial statement risk associated with changes in interest rates.

However, the fair value of the Convertible Notes changes primarily when the market price of our common stock fluctuates or interest rates change.

Exchange Rate Risk

We are subject to currency translation exposure

on the results of our non-U.S.

We are subject to currency translation exposure on the results of our non-U.S.

operations, primarily in the U.K.

Foreign currency translation risk is the risk that exchange

rate gains or losses arise from translating foreign entities’ statements of earnings and balance sheets from functional currency

to our reporting currency (the U.S.

Foreign currency translation risk is the risk that exchange rate gains or losses arise from translating foreign entities’ statements of earnings and balance sheets from functional currency to our reporting currency (the U.S.

dollar) for consolidation purposes.

The advisory fees earned on our European listed ETPs are predominantly

The advisory fees earned on our European listed ETPs are predominantly in U.S.

dollars (and also paid in gold, other precious metals and cryptocurrency, as described below);

however, expenses for corporate

overhead are generally incurred in British pounds.

Currently, we do not enter into derivative financial instruments aimed at offsetting

certain exposures in the statement of operations or the balance sheet but may seek to do so in the future.

Exchange rate risk associated with the euro

is not considered to be significant.

however, expenses for corporate overhead are generally incurred in British pounds.

Currently, we do not enter into derivative financial instruments aimed at offsetting certain exposures in the statement of operations or the balance sheet but may seek to do so in the future.

Exchange rate risk associated with the euro is not considered to be significant.

Commodity and Cryptocurrency Price Risk

Fluctuations in the prices of commodities and

cryptocurrencies that are linked to certain of our ETPs could have a material adverse effect on our AUM and revenues.

In addition, a portion

of the advisory fee revenues we receive on our ETPs backed by gold, other precious metals and cryptocurrencies are paid in the underlying

metal or cryptocurrency.

While we readily sell the gold, precious metals and cryptocurrencies that we earn under these advisory contracts,

we still may maintain a position.

We currently do not enter into arrangements to hedge against fluctuations in the price of these commodities

and cryptocurrencies and any hedging we may undertake in the future may not be cost-effective or sufficient to hedge against this exposure.

Fluctuations in the prices of commodities and cryptocurrencies that are linked to certain of our ETPs could have a material adverse effect on our AUM and revenues.

In addition, a portion of the advisory fee revenues we receive on our ETPs backed by gold, other precious metals and cryptocurrencies are paid in the underlying metal or cryptocurrency.

While we readily sell the gold, precious metals and cryptocurrencies that we earn under these advisory contracts, we still may maintain a position.

We currently do not enter into arrangements to hedge against fluctuations in the price of these commodities and cryptocurrencies and any hedging we may undertake in the future may not be cost-effective or sufficient to hedge against this exposure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk