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Is WisdomTree U.S. SmallCap Dividend ETF (DES) a Strong ETF Right Now?
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The WisdomTree U.S. SmallCap Dividend ETF (DES - Free Report) made its debut on 06/16/2006, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small 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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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
The fund is managed by Wisdomtree. DES has been able to amass assets over $1.84 billion, making it one of the larger ETFs in the Style Box - Small Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the WisdomTree U.S. SmallCap Dividend Index.
The WisdomTree U.S. SmallCap Dividend Index is a fundamentally weighted index measuring the performance of the small-capitalization segment of the US dividend-paying market.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.38% for DES, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.84%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 24.40% of the portfolio. Industrials and Utilities round out the top three.
Taking into account individual holdings, Cogent Communications Hldgs (CCOI - Free Report) accounts for about 1.22% of the fund's total assets, followed by South Jersey Industries Inc and Xerox Holdings Corp (XRX - Free Report) .
Its top 10 holdings account for approximately 9.8% of DES's total assets under management.
Performance and Risk
The ETF has lost about -6.93% and is down about -4.87% so far this year and in the past one year (as of 06/06/2022), respectively. DES has traded between $28.96 and $33.79 during this last 52-week period.
The ETF has a beta of 1.10 and standard deviation of 29.71% for the trailing three-year period, making it a medium risk choice in the space. With about 677 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap Dividend ETF is an excellent option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Russell 2000 Value ETF (IWN - Free Report) tracks Russell 2000 Value Index and the Vanguard SmallCap Value ETF (VBR - Free Report) tracks CRSP U.S. Small Cap Value Index. IShares Russell 2000 Value ETF has $12.81 billion in assets, Vanguard SmallCap Value ETF has $25.11 billion. IWN has an expense ratio of 0.24% and VBR 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 - Small 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. SmallCap Dividend ETF (DES) a Strong ETF Right Now?
The WisdomTree U.S. SmallCap Dividend ETF (DES - Free Report) made its debut on 06/16/2006, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small 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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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
The fund is managed by Wisdomtree. DES has been able to amass assets over $1.84 billion, making it one of the larger ETFs in the Style Box - Small Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the WisdomTree U.S. SmallCap Dividend Index.
The WisdomTree U.S. SmallCap Dividend Index is a fundamentally weighted index measuring the performance of the small-capitalization segment of the US dividend-paying market.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.38% for DES, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.84%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 24.40% of the portfolio. Industrials and Utilities round out the top three.
Taking into account individual holdings, Cogent Communications Hldgs (CCOI - Free Report) accounts for about 1.22% of the fund's total assets, followed by South Jersey Industries Inc and Xerox Holdings Corp (XRX - Free Report) .
Its top 10 holdings account for approximately 9.8% of DES's total assets under management.
Performance and Risk
The ETF has lost about -6.93% and is down about -4.87% so far this year and in the past one year (as of 06/06/2022), respectively. DES has traded between $28.96 and $33.79 during this last 52-week period.
The ETF has a beta of 1.10 and standard deviation of 29.71% for the trailing three-year period, making it a medium risk choice in the space. With about 677 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap Dividend ETF is an excellent option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Russell 2000 Value ETF (IWN - Free Report) tracks Russell 2000 Value Index and the Vanguard SmallCap Value ETF (VBR - Free Report) tracks CRSP U.S. Small Cap Value Index. IShares Russell 2000 Value ETF has $12.81 billion in assets, Vanguard SmallCap Value ETF has $25.11 billion. IWN has an expense ratio of 0.24% and VBR 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 - Small 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.