Launched on 07/25/2013, the WisdomTree U.S. SmallCap Quality Dividend Growth ETF (
DGRS Quick Quote DGRS - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend category of the market. What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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 $201.68 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the WisdomTree U.S. SmallCap Quality Dividend Growth Index.
The WisdomTree U.S. SmallCap Quality Dividend Growth Index is a fundamentally weighted index that consists of the small-capitalization segment of dividend-paying stocks with growth characteristics.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.38% for DGRS, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.59%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 26.80% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Consumer Discretionary round out the top three.
When you look at individual holdings, Avista Corp (
AVA Quick Quote AVA - Free Report) accounts for about 2.55% of the fund's total assets, followed by Rent-A-Center Inc/tx ( RCII Quick Quote RCII - Free Report) and B&g Foods Inc ( BGS Quick Quote BGS - Free Report) .
DGRS's top 10 holdings account for about 18.41% of its total assets under management.
Performance and Risk
The ETF has added about 19.56% and was up about 58.99% so far this year and in the past one year (as of 06/22/2021), respectively. DGRS has traded between $28.63 and $48.44 during this last 52-week period.
DGRS has a beta of 1.21 and standard deviation of 32.28% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 217 holdings, it effectively diversifies company-specific risk.
WisdomTree U.S. SmallCap Quality Dividend Growth ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core Dividend Growth ETF (
DGRO Quick Quote DGRO - Free Report) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF ( VIG Quick Quote VIG - Free Report) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $18.81 billion in assets, Vanguard Dividend Appreciation ETF has $58.63 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 Style Box - Small Cap Blend.
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.