Westwood Holdings Group (WHG) recently disclosed its second-quarter 2026 financial outcomes, illustrating a proactive strategic pivot toward expanding its presence in higher-revenue generating sectors such as Exchange-Traded Funds (ETFs) and private capital. This strategic reorientation is designed to counteract withdrawals from its traditional large-cap value investment portfolios. The firm reported a robust total revenue of $25.3 million and a net income of $1.5 million for the quarter, underscoring its capacity to sustain growth amidst evolving market conditions. Notable achievements during this period include the significant milestone of exceeding $400 million in assets under management within its ETF offerings, the successful acquisition of $147 million in new private capital commitments, and the announcement of a groundbreaking ETF listing on the newly established Texas Stock Exchange. These initiatives highlight Westwood's commitment to innovation and its forward-looking approach to wealth management and investment solutions.
During the Q2 2026 earnings call, Westwood Holdings Group’s leadership team, including CEO Brian Casey and CFO Terry Forbes, provided comprehensive insights into the company's financial health and strategic direction. The discussion, held on August 8, 2026, highlighted an increase in total revenues to $25.3 million, primarily fueled by the expansion of its ETF platform and private energy secondaries funds. Net income reached $1.5 million, translating to $0.17 per diluted share, a notable improvement attributed to reduced compensation expenses compared to the preceding quarter. Economic earnings, a non-GAAP measure, stood at $3.0 million, or $0.33 per share, after adjusting for non-cash equity compensation and intangible amortization.
Assets Under Management (AUM) for the firm totaled $17.0 billion, experiencing net outflows of $1.6 billion but benefiting from market appreciation of $1.2 billion. Assets Under Advisement (AUA) recorded $1.0 billion, with $53 million from market appreciation despite $4 million in net outflows. Institutional AUM represented 49% of the total, followed by wealth management AUM at 26%, and mutual fund and ETF AUM at 25%. The ETF platform's assets surpassed $400 million in July, a testament to growing platform approvals and advisor interest. Concurrently, the private capital platform reached $500 million, boosted by $147 million in new commitments for energy secondaries co-investments during the quarter. Managed investment solutions attracted $350 million year-to-date, with four new opportunities identified in Q2.
Brian Casey, the CEO, addressed the challenges posed by concentrated outflows from legacy large-cap value strategies. He noted that these outflows were a consequence of performance issues and broader industry trends, particularly the increasing preference among investors for passive ETFs. To capitalize on this shift, Westwood has strategically invested in three key growth areas: ETFs, alternative investments, and managed investment solutions. The company reported substantial pipeline growth across all these segments, with institutional gross sales reaching $382 million, primarily driven by the private capital business and new institutional mandates. Casey also revealed the upcoming launch of the Westwood Salient Enhanced Power & Infrastructure ETF (PWRX) on the Texas Stock Exchange in mid-September, marking it as the first new ETF to be listed on this exchange. This move leverages Texas's status as a global energy hub and its burgeoning role in AI data center development, creating significant demand for power infrastructure.
CFO Terry Forbes further elaborated on the financial specifics, indicating that private capital funds command annual management fees ranging from 1% to 1.5%, with potential for future performance-based carry of 10% to 15% above an 8% hurdle rate. This structure promises enhanced revenue streams as these newer segments mature. The firm's balance sheet showed $56.5 million in cash and investments, providing ample liquidity for ongoing operations and strategic expansion initiatives. The Board of Directors also approved a regular cash dividend of $0.15 per common share, payable on October 1, 2026. These financial details underscore Westwood's commitment to shareholder returns while actively reshaping its investment portfolio to align with contemporary market demands and future growth opportunities.
Westwood Holdings Group is proactively adapting its business model, moving away from traditional value strategies to embrace the burgeoning opportunities in ETFs and private capital. This shift not only diversifies the firm's offerings but also positions it for enhanced growth and profitability, aiming to reach significant asset milestones in its new strategic areas. The company’s focus on innovative products and strategic partnerships, like the one with ETF Capital Markets Advisors, is central to its long-term vision for delivering superior value to clients and shareholders alike.
