If you're interested in broad exposure to the Small Cap Value segment of the US equity market, look no further than the WisdomTree U.S. SmallCap ETF (
EES Quick Quote EES - Free Report) , a passively managed exchange traded fund launched on 02/23/2007.
The fund is sponsored by Wisdomtree. It has amassed assets over $404.45 million, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
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 counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.38%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.76%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Consumer Discretionary sector--about 22.40% of the portfolio. Financials and Industrials round out the top three.
Looking at individual holdings, Range Resources Corp (
RRC Quick Quote RRC - Free Report) accounts for about 1.26% of total assets, followed by Cleveland-Cliffs Inc ( CLF Quick Quote CLF - Free Report) and Warrior Met Coal Inc ( HCC Quick Quote HCC - Free Report) .
The top 10 holdings account for about 8.93% of total assets under management.
Performance and Risk
EES seeks to match the performance of the WisdomTree U.S. SmallCap Earnings Index before fees and expenses. The WisdomTree U.S. SmallCap Earnings Index is a fundamentally weighted index that measures the performance of earnings-generating companies within the small-capitalization segment of the U.S. Stock Market.
The ETF has lost about -23.45% so far this year and is down about -17.28% in the last one year (as of 07/27/2020). In the past 52-week period, it has traded between $19.73 and $38.59.
The ETF has a beta of 1.41 and standard deviation of 29.21% for the trailing three-year period, making it a medium risk choice in the space. With about 843 holdings, it effectively diversifies company-specific risk.
WisdomTree U.S. SmallCap ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, EES is a sufficient option for those seeking exposure to the Style Box - Small Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 Value ETF (
IWN Quick Quote IWN - Free Report) and the Vanguard SmallCap Value ETF ( VBR Quick Quote VBR - Free Report) track a similar index. While iShares Russell 2000 Value ETF has $7.67 billion in assets, Vanguard SmallCap Value ETF has $12.95 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%. Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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.