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Is WisdomTree U.S. MidCap Dividend ETF (DON) a Strong ETF Right Now?
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A smart beta exchange traded fund, the WisdomTree U.S. MidCap Dividend ETF (DON - Free Report) debuted on 06/16/2006, and offers broad exposure to the Style Box - Mid Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Because the fund has amassed over $3.17 billion, this makes it one of the larger ETFs in the Style Box - Mid Cap Value. DON is managed by Wisdomtree. DON, before fees and expenses, seeks to match the performance of the WisdomTree U.S. MidCap Dividend Index.
The WisdomTree U.S. MidCap Dividend Index is a fundamentally weighted index that measures the performance of the mid-capitalization segment of the US dividend-paying market.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.38% for DON, making it on par with most peer products in the space.
DON's 12-month trailing dividend yield is 2.13%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Representing 24.60% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Evergy Inc (EVRG - Free Report) accounts for about 1.29% of total assets, followed by Omnicom Group Inc (OMC - Free Report) and Fidelity National Financial Inc (FNF - Free Report) .
Its top 10 holdings account for approximately 10.88% of DON's total assets under management.
Performance and Risk
The ETF has lost about -1.18% so far this year and is up roughly 14.42% in the last one year (as of 03/24/2022). In the past 52-week period, it has traded between $39.94 and $45.27.
The ETF has a beta of 1.11 and standard deviation of 28.04% for the trailing three-year period, making it a medium risk choice in the space. With about 343 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. MidCap Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell MidCap Value ETF (IWS - Free Report) tracks Russell MidCap Value Index and the Vanguard MidCap Value ETF (VOE - Free Report) tracks CRSP U.S. Mid Cap Value Index. IShares Russell MidCap Value ETF has $14.93 billion in assets, Vanguard MidCap Value ETF has $16.56 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Mid Cap Value.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is WisdomTree U.S. MidCap Dividend ETF (DON) a Strong ETF Right Now?
A smart beta exchange traded fund, the WisdomTree U.S. MidCap Dividend ETF (DON - Free Report) debuted on 06/16/2006, and offers broad exposure to the Style Box - Mid Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Because the fund has amassed over $3.17 billion, this makes it one of the larger ETFs in the Style Box - Mid Cap Value. DON is managed by Wisdomtree. DON, before fees and expenses, seeks to match the performance of the WisdomTree U.S. MidCap Dividend Index.
The WisdomTree U.S. MidCap Dividend Index is a fundamentally weighted index that measures the performance of the mid-capitalization segment of the US dividend-paying market.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.38% for DON, making it on par with most peer products in the space.
DON's 12-month trailing dividend yield is 2.13%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Representing 24.60% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Evergy Inc (EVRG - Free Report) accounts for about 1.29% of total assets, followed by Omnicom Group Inc (OMC - Free Report) and Fidelity National Financial Inc (FNF - Free Report) .
Its top 10 holdings account for approximately 10.88% of DON's total assets under management.
Performance and Risk
The ETF has lost about -1.18% so far this year and is up roughly 14.42% in the last one year (as of 03/24/2022). In the past 52-week period, it has traded between $39.94 and $45.27.
The ETF has a beta of 1.11 and standard deviation of 28.04% for the trailing three-year period, making it a medium risk choice in the space. With about 343 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. MidCap Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell MidCap Value ETF (IWS - Free Report) tracks Russell MidCap Value Index and the Vanguard MidCap Value ETF (VOE - Free Report) tracks CRSP U.S. Mid Cap Value Index. IShares Russell MidCap Value ETF has $14.93 billion in assets, Vanguard MidCap Value ETF has $16.56 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Mid Cap Value.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.