Launched on 06/16/2006, the WisdomTree International Equity ETF (DWM Quick QuoteDWM - Free Report) is a smart beta exchange traded fund offering broad exposure to the Broad Developed World ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

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.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

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

DWM is managed by Wisdomtree, and this fund has amassed over $546.55 million, which makes it one of the average sized ETFs in the Broad Developed World ETFs. This particular fund seeks to match the performance of the WisdomTree International Equity Index before fees and expenses.

The WisdomTree International Equity Index is a fundamentally weighted Index that measures the performance of dividend-paying companies in the industrialized world, excluding Canada and the United States.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.48%.

The fund has a 12-month trailing dividend yield of 4.58%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

When you look at individual holdings, Bhp Group Ltd (BHP Quick QuoteBHP - Free Report) accounts for about 3% of the fund's total assets, followed by Nestle Sa (NESN) and Rio Tinto Plc (RIO Quick QuoteRIO - Free Report) .

Its top 10 holdings account for approximately 13.94% of DWM's total assets under management.

Performance and Risk

So far this year, DWM has lost about -9.68%, and is down about -7.62% in the last one year (as of 12/08/2022). During this past 52-week period, the fund has traded between $39.86 and $55.69.

DWM has a beta of 0.80 and standard deviation of 22.43% for the trailing three-year period, which makes the fund a low risk choice in the space. With about 859 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree International Equity ETF is not a suitable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.

IShares MSCI EAFE ETF (EFA Quick QuoteEFA - Free Report) tracks MSCI EAFE Index and the iShares Core MSCI EAFE ETF (IEFA Quick QuoteIEFA - Free Report) tracks MSCI EAFE Investable Market Index. IShares MSCI EAFE ETF has $46.26 billion in assets, iShares Core MSCI EAFE ETF has $89.61 billion. EFA has an expense ratio of 0.32% and IEFA charges 0.07%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed 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.