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Is WisdomTree U.S. Multifactor ETF (USMF) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - All Cap Blend category of the market, the WisdomTree U.S. Multifactor ETF (USMF - Free Report) is a smart beta exchange traded fund launched on 06/29/2017.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by Wisdomtree, USMF has amassed assets over $249.88 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. USMF, 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
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.
Operating expenses on an annual basis are 0.28% for USMF, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.80%.
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.
USMF's heaviest allocation is in the Information Technology sector, which is about 27% of the portfolio. Its Healthcare and Financials round out the top three.
Taking into account individual holdings, International Business Machines Corp (IBM - Free Report) accounts for about 1.47% of the fund's total assets, followed by Jack Henry & Associates Inc (JKHY - Free Report) and Fiserv Inc .
The top 10 holdings account for about 11.89% of total assets under management.
Performance and Risk
The ETF has lost about -3.40% so far this year and is down about -9.71% in the last one year (as of 03/21/2023). In the past 52-week period, it has traded between $34.15 and $41.79.
The ETF has a beta of 0.91 and standard deviation of 19.56% for the trailing three-year period. With about 200 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 $39.63 billion in assets, Vanguard Total Stock Market ETF has $271.77 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?
Designed to provide broad exposure to the Style Box - All Cap Blend category of the market, the WisdomTree U.S. Multifactor ETF (USMF - Free Report) is a smart beta exchange traded fund launched on 06/29/2017.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by Wisdomtree, USMF has amassed assets over $249.88 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. USMF, 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
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.
Operating expenses on an annual basis are 0.28% for USMF, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.80%.
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.
USMF's heaviest allocation is in the Information Technology sector, which is about 27% of the portfolio. Its Healthcare and Financials round out the top three.
Taking into account individual holdings, International Business Machines Corp (IBM - Free Report) accounts for about 1.47% of the fund's total assets, followed by Jack Henry & Associates Inc (JKHY - Free Report) and Fiserv Inc .
The top 10 holdings account for about 11.89% of total assets under management.
Performance and Risk
The ETF has lost about -3.40% so far this year and is down about -9.71% in the last one year (as of 03/21/2023). In the past 52-week period, it has traded between $34.15 and $41.79.
The ETF has a beta of 0.91 and standard deviation of 19.56% for the trailing three-year period. With about 200 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 $39.63 billion in assets, Vanguard Total Stock Market ETF has $271.77 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.