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

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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.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

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.

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

DNL is managed by Wisdomtree, and this fund has amassed over $298.90 million, which makes 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

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.

Operating expenses on an annual basis are 0.58% for DNL, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.75%.

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.

Looking at individual holdings, Novo Nordisk A/s (NOVOB) accounts for about 7.02% of total assets, followed by British American Tobacco Plc and Fortescue Metals Group Ltd .

The top 10 holdings account for about 36.61% of total assets under management.

Performance and Risk

The ETF has added roughly 18.53% and was up about 19.20% so far this year and in the past one year (as of 12/31/2020), respectively. DNL has traded between $46.16 and $76.64 during this last 52-week period.

The ETF has a beta of 0.84 and standard deviation of 22.29% for the trailing three-year period, making it 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 $14.54 billion in assets, Vanguard Dividend Appreciation ETF has $52.65 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.


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