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Is WisdomTree U.S. SmallCap Quality Dividend Growth ETF (DGRS) a Strong ETF Right Now?
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Making its debut on 07/25/2013, smart beta exchange traded fund WisdomTree U.S. SmallCap Quality Dividend Growth ETF (DGRS - Free Report) provides investors broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
DGRS is managed by Wisdomtree, and this fund has amassed over $212.23 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, DGRS seeks to match the performance of the WisdomTree U.S. SmallCap Quality Dividend Growth Index.
The WisdomTree U.S. SmallCap Quality Dividend Growth Index is a fundamentally weighted index that consists of the small-capitalization segment of dividend-paying stocks with growth characteristics.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.38%.
The fund has a 12-month trailing dividend yield of 2.73%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For DGRS, it has heaviest allocation in the Industrials sector --about 23.90% of the portfolio --while Financials and Consumer Discretionary round out the top three.
When you look at individual holdings, Epr Properties (EPR - Free Report) accounts for about 2.25% of the fund's total assets, followed by Xerox Holdings Corp (XRX - Free Report) and Spire Inc (SR - Free Report) .
Its top 10 holdings account for approximately 17.29% of DGRS's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. SmallCap Quality Dividend Growth ETF has lost about -13.07% so far, and is down about -8.11% over the last 12 months (as of 05/13/2022). DGRS has traded between $40.77 and $48.57 in this past 52-week period.
The fund has a beta of 1.11 and standard deviation of 32.69% for the trailing three-year period, which makes DGRS a medium risk choice in this particular space. With about 291 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap Quality Dividend Growth ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG - Free Report) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $22.33 billion in assets, Vanguard Dividend Appreciation ETF has $60.85 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.
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 - Small Cap Blend.
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. SmallCap Quality Dividend Growth ETF (DGRS) a Strong ETF Right Now?
Making its debut on 07/25/2013, smart beta exchange traded fund WisdomTree U.S. SmallCap Quality Dividend Growth ETF (DGRS - Free Report) provides investors broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
DGRS is managed by Wisdomtree, and this fund has amassed over $212.23 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, DGRS seeks to match the performance of the WisdomTree U.S. SmallCap Quality Dividend Growth Index.
The WisdomTree U.S. SmallCap Quality Dividend Growth Index is a fundamentally weighted index that consists of the small-capitalization segment of dividend-paying stocks with growth characteristics.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.38%.
The fund has a 12-month trailing dividend yield of 2.73%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For DGRS, it has heaviest allocation in the Industrials sector --about 23.90% of the portfolio --while Financials and Consumer Discretionary round out the top three.
When you look at individual holdings, Epr Properties (EPR - Free Report) accounts for about 2.25% of the fund's total assets, followed by Xerox Holdings Corp (XRX - Free Report) and Spire Inc (SR - Free Report) .
Its top 10 holdings account for approximately 17.29% of DGRS's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. SmallCap Quality Dividend Growth ETF has lost about -13.07% so far, and is down about -8.11% over the last 12 months (as of 05/13/2022). DGRS has traded between $40.77 and $48.57 in this past 52-week period.
The fund has a beta of 1.11 and standard deviation of 32.69% for the trailing three-year period, which makes DGRS a medium risk choice in this particular space. With about 291 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap Quality Dividend Growth ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG - Free Report) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $22.33 billion in assets, Vanguard Dividend Appreciation ETF has $60.85 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.
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 - Small Cap Blend.
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.