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Is WisdomTree U.S. SmallCap Dividend ETF (DES) a Strong ETF Right Now?
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Making its debut on 06/16/2006, smart beta exchange traded fund WisdomTree U.S. SmallCap Dividend ETF (DES - Free Report) provides investors broad exposure to the Style Box - Small Cap Value 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
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. DES has been able to amass assets over $2.01 billion, making it one of the larger ETFs in the Style Box - Small Cap Value. DES, before fees and expenses, seeks to match the performance of the WisdomTree U.S. SmallCap Dividend Index.
The WisdomTree U.S. SmallCap Dividend Index is a fundamentally weighted index measuring the performance of the small-capitalization segment of the US dividend-paying market.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for DES are 0.38%, which makes it on par with most peer products in the space.
DES's 12-month trailing dividend yield is 2.63%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
DES's heaviest allocation is in the Financials sector, which is about 24% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Epr Properties (EPR - Free Report) accounts for about 0.81% of total assets, followed by Cogent Communications Hldgs (CCOI - Free Report) and Arch Resources Inc (ARCH - Free Report) .
Its top 10 holdings account for approximately 6.89% of DES's total assets under management.
Performance and Risk
So far this year, DES return is roughly 8.98%, and is up about 0.94% in the last one year (as of 02/13/2023). During this past 52-week period, the fund has traded between $25.74 and $32.61.
The fund has a beta of 1.12 and standard deviation of 30.69% for the trailing three-year period, which makes DES a medium risk choice in this particular space. With about 631 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap Dividend ETF is an excellent option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Russell 2000 Value ETF (IWN - Free Report) tracks Russell 2000 Value Index and the Vanguard Small-Cap Value ETF (VBR - Free Report) tracks CRSP U.S. Small Cap Value Index. IShares Russell 2000 Value ETF has $12.31 billion in assets, Vanguard Small-Cap Value ETF has $26.13 billion. IWN has an expense ratio of 0.23% and VBR 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 Style Box - Small Cap Value.
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. SmallCap Dividend ETF (DES) a Strong ETF Right Now?
Making its debut on 06/16/2006, smart beta exchange traded fund WisdomTree U.S. SmallCap Dividend ETF (DES - Free Report) provides investors broad exposure to the Style Box - Small Cap Value 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
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. DES has been able to amass assets over $2.01 billion, making it one of the larger ETFs in the Style Box - Small Cap Value. DES, before fees and expenses, seeks to match the performance of the WisdomTree U.S. SmallCap Dividend Index.
The WisdomTree U.S. SmallCap Dividend Index is a fundamentally weighted index measuring the performance of the small-capitalization segment of the US dividend-paying market.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for DES are 0.38%, which makes it on par with most peer products in the space.
DES's 12-month trailing dividend yield is 2.63%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
DES's heaviest allocation is in the Financials sector, which is about 24% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Epr Properties (EPR - Free Report) accounts for about 0.81% of total assets, followed by Cogent Communications Hldgs (CCOI - Free Report) and Arch Resources Inc (ARCH - Free Report) .
Its top 10 holdings account for approximately 6.89% of DES's total assets under management.
Performance and Risk
So far this year, DES return is roughly 8.98%, and is up about 0.94% in the last one year (as of 02/13/2023). During this past 52-week period, the fund has traded between $25.74 and $32.61.
The fund has a beta of 1.12 and standard deviation of 30.69% for the trailing three-year period, which makes DES a medium risk choice in this particular space. With about 631 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap Dividend ETF is an excellent option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Russell 2000 Value ETF (IWN - Free Report) tracks Russell 2000 Value Index and the Vanguard Small-Cap Value ETF (VBR - Free Report) tracks CRSP U.S. Small Cap Value Index. IShares Russell 2000 Value ETF has $12.31 billion in assets, Vanguard Small-Cap Value ETF has $26.13 billion. IWN has an expense ratio of 0.23% and VBR 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 Style Box - Small Cap Value.
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.