Back to top

Image: Bigstock

Is WisdomTree Global exU.S. Quality Dividend Growth ETF (DNL) a Strong ETF Right Now?

Read MoreHide Full Article

A smart beta exchange traded fund, the WisdomTree Global exU.S. Quality Dividend Growth ETF (DNL - Free Report) debuted on 06/16/2006, and offers broad exposure to the World ETFs category of the market.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

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.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

The fund is sponsored by Wisdomtree. It has amassed assets over $238.53 million, making it one of the average sized ETFs in the World ETFs. This particular fund, before fees and expenses, seeks to match the performance of the WisdomTree Global ex-U.S. Quality Dividend Growth Index.

The WisdomTree Global ex-U.S. Quality Dividend Growth Index is a fundamentally weighted index that measures the performance of dividend paying stocks with growth characteristics in the developed and emerging markets outside of the United States.

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.

Operating expenses on an annual basis are 0.58% for this ETF, which makes it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.02%.

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.

When you look at individual holdings, Novo Nordisk A/s (NOVOB) accounts for about 7.02% of the fund's total assets, followed by British American Tobacco Plc (BATS) and Fortescue Metals Group Ltd (FMG).

DNL's top 10 holdings account for about 36.61% of its total assets under management.

Performance and Risk

The ETF has gained about 5.11% and it's up approximately 15.80% so far this year and in the past one year (as of 10/26/2020), respectively. DNL has traded between $46.16 and $69.57 during this last 52-week period.

DNL has a beta of 0.83 and standard deviation of 22.03% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 245 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree Global exU.S. Quality Dividend Growth ETF is not a suitable option for investors seeking to outperform the World ETFs segment of the market. Instead, there are other ETFs in the space which investors should 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 $12.31 billion in assets, Vanguard Dividend Appreciation ETF has $49.29 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 World ETFs.

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.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


WISTR-GL XUS QD (DNL) - free report >>

ISHRS-CORE DG (DGRO) - free report >>

VANGD-DIV APPRC (VIG) - free report >>

Published in