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Is WisdomTree U.S. Multifactor ETF (USMF) a Strong ETF Right Now?
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A smart beta exchange traded fund, the WisdomTree U.S. Multifactor ETF (USMF - Free Report) debuted on 06/29/2017, and offers broad exposure to the Style Box - All Cap Blend 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Wisdomtree. USMF has been able to amass assets over $223.24 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the WisdomTree U.S. Multifactor Index.
The WisdomTree U.S. Multifactor Index is comprised of 200 U.S. companies with the highest composite scores based on two fundamental factors, value and quality measures, and two technical factors, momentum and correlation.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for USMF are 0.28%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.65%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 26.20% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Jack Henry & Associates Inc (JKHY - Free Report) accounts for about 1.63% of total assets, followed by International Business Machines Corp (IBM - Free Report) and Roper Technologies Inc (ROP - Free Report) .
USMF's top 10 holdings account for about 13.03% of its total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. Multifactor ETF has lost about -8.34% so far, and is down about -3.85% over the last 12 months (as of 09/12/2022). USMF has traded between $35.27 and $42.22 in this past 52-week period.
USMF has a beta of 0.90 and standard deviation of 22.48% for the trailing three-year period. With about 199 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. Multifactor ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $41.88 billion in assets, Vanguard Total Stock Market ETF has $266.82 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.
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 - All Cap Blend.
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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Is WisdomTree U.S. Multifactor ETF (USMF) a Strong ETF Right Now?
A smart beta exchange traded fund, the WisdomTree U.S. Multifactor ETF (USMF - Free Report) debuted on 06/29/2017, and offers broad exposure to the Style Box - All Cap Blend 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Wisdomtree. USMF has been able to amass assets over $223.24 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the WisdomTree U.S. Multifactor Index.
The WisdomTree U.S. Multifactor Index is comprised of 200 U.S. companies with the highest composite scores based on two fundamental factors, value and quality measures, and two technical factors, momentum and correlation.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for USMF are 0.28%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.65%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 26.20% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Jack Henry & Associates Inc (JKHY - Free Report) accounts for about 1.63% of total assets, followed by International Business Machines Corp (IBM - Free Report) and Roper Technologies Inc (ROP - Free Report) .
USMF's top 10 holdings account for about 13.03% of its total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. Multifactor ETF has lost about -8.34% so far, and is down about -3.85% over the last 12 months (as of 09/12/2022). USMF has traded between $35.27 and $42.22 in this past 52-week period.
USMF has a beta of 0.90 and standard deviation of 22.48% for the trailing three-year period. With about 199 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. Multifactor ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $41.88 billion in assets, Vanguard Total Stock Market ETF has $266.82 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.
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 - All Cap Blend.
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.