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

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Making its debut on 06/16/2006, smart beta exchange traded fund WisdomTree Global exU.S. Quality Dividend Growth ETF (DNL - Free Report) provides investors broad exposure to the World ETFs category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

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.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

The fund is managed by Wisdomtree, and has been able to amass over $353.67 million, which makes it one of the average sized ETFs in the World ETFs. Before fees and expenses, this particular fund 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

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

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

The fund has a 12-month trailing dividend yield of 1.67%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

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 and Fortescue Metals Group Ltd .

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

Performance and Risk

So far this year, DNL has added about 4.42%, and is up about 21.09% in the last one year (as of 01/22/2021). During this past 52-week period, the fund has traded between $46.16 and $80.38.

The fund has a beta of 0.85 and standard deviation of 22.31% for the trailing three-year period, which makes DNL a medium risk choice in this particular 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 $15.24 billion in assets, Vanguard Dividend Appreciation ETF has $53.58 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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