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Is WisdomTree U.S. SmallCap Dividend ETF (DES) a Strong ETF Right Now?
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A smart beta exchange traded fund, the WisdomTree U.S. SmallCap Dividend ETF (DES - Free Report) debuted on 06/16/2006, and offers broad exposure to the Style Box - Small Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the 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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Wisdomtree, and has been able to amass over $1.83 billion, which makes it one of the larger ETFs in the Style Box - Small Cap Value. DES, 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for DES are 0.38%, which makes it on par with most peer products in the space.
DES's 12-month trailing dividend yield is 3.12%.
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.
DES's heaviest allocation is in the Financials sector, which is about 21.70% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Cogent Communications Hldgs (CCOI - Free Report) accounts for about 0.91% of the fund's total assets, followed by Epr Properties (EPR - Free Report) and Scotts Miracle-Gro Co/the (SMG - Free Report) .
Its top 10 holdings account for approximately 7.58% of DES's total assets under management.
Performance and Risk
The ETF has added about 2.51% and is up about 8.02% so far this year and in the past one year (as of 06/19/2023), respectively. DES has traded between $25.74 and $32.13 during this last 52-week period.
The ETF has a beta of 1.10 and standard deviation of 21.51% for the trailing three-year period, making it a medium risk choice in the space. With about 627 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 Small-Cap Value ETF (VBR - Free Report) tracks CRSP U.S. Small Cap Value Index. IShares Russell 2000 Value ETF has $11.20 billion in assets, Vanguard Small-Cap Value ETF has $24.62 billion. IWN has an expense ratio of 0.23% 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?
A smart beta exchange traded fund, the WisdomTree U.S. SmallCap Dividend ETF (DES - Free Report) debuted on 06/16/2006, and offers broad exposure to the Style Box - Small Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the 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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Wisdomtree, and has been able to amass over $1.83 billion, which makes it one of the larger ETFs in the Style Box - Small Cap Value. DES, 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for DES are 0.38%, which makes it on par with most peer products in the space.
DES's 12-month trailing dividend yield is 3.12%.
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.
DES's heaviest allocation is in the Financials sector, which is about 21.70% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Cogent Communications Hldgs (CCOI - Free Report) accounts for about 0.91% of the fund's total assets, followed by Epr Properties (EPR - Free Report) and Scotts Miracle-Gro Co/the (SMG - Free Report) .
Its top 10 holdings account for approximately 7.58% of DES's total assets under management.
Performance and Risk
The ETF has added about 2.51% and is up about 8.02% so far this year and in the past one year (as of 06/19/2023), respectively. DES has traded between $25.74 and $32.13 during this last 52-week period.
The ETF has a beta of 1.10 and standard deviation of 21.51% for the trailing three-year period, making it a medium risk choice in the space. With about 627 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 Small-Cap Value ETF (VBR - Free Report) tracks CRSP U.S. Small Cap Value Index. IShares Russell 2000 Value ETF has $11.20 billion in assets, Vanguard Small-Cap Value ETF has $24.62 billion. IWN has an expense ratio of 0.23% 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.