Designed to provide broad exposure to the Style Box - Small Cap Blend category of the market, the WisdomTree U.S. SmallCap Quality Dividend Growth ETF (
DGRS Quick Quote DGRS - Free Report) is a smart beta exchange traded fund launched on 07/25/2013. 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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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
The fund is sponsored by Wisdomtree. It has amassed assets over $206.71 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, DGRS 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.38% for DGRS, making it on par with most peer products in the space.
DGRS's 12-month trailing dividend yield is 2.96%.
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.
DGRS's heaviest allocation is in the Industrials sector, which is about 23.90% of the portfolio. Its Financials and Consumer Discretionary round out the top three.
When you look at individual holdings, Epr Properties (
EPR Quick Quote EPR - Free Report) accounts for about 2.25% of the fund's total assets, followed by Xerox Holdings Corp ( XRX Quick Quote XRX - Free Report) and Spire Inc ( SR Quick Quote SR - Free Report) .
The top 10 holdings account for about 17.29% of total assets under management.
Performance and Risk
The ETF has lost about -15.92% so far this year and is down about -11.52% in the last one year (as of 07/13/2022). In the past 52-week period, it has traded between $38.41 and $48.57.
The ETF has a beta of 1.09 and standard deviation of 32.96% for the trailing three-year period, making it a medium risk choice in the space. With about 291 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 $22.01 billion in assets, Vanguard Dividend Appreciation ETF has $59.84 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.