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Is WisdomTree U.S. MidCap Dividend ETF (DON) a Strong ETF Right Now?
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The WisdomTree U.S. MidCap Dividend ETF (DON - Free Report) was launched on 06/16/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Mid 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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.
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
Managed by Wisdomtree, DON has amassed assets over $3.11 billion, making it one of the larger ETFs in the Style Box - Mid Cap Value. This particular fund seeks to match the performance of the WisdomTree U.S. MidCap Dividend Index before fees and expenses.
The WisdomTree U.S. MidCap Dividend Index is a fundamentally weighted index that measures the performance of the mid-capitalization segment of the US dividend-paying market.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for DON are 0.38%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.04%.
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.
For DON, it has heaviest allocation in the Financials sector --about 22.90% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Packaging Corp Of America (PKG - Free Report) accounts for about 1.12% of the fund's total assets, followed by Chesapeake Energy Corp (CHK - Free Report) and Paramount Global - Class B (PARA - Free Report) .
DON's top 10 holdings account for about 9.38% of its total assets under management.
Performance and Risk
The ETF has lost about -1.49% and is down about -4.37% so far this year and in the past one year (as of 06/06/2023), respectively. DON has traded between $37.67 and $45.40 during this last 52-week period.
The ETF has a beta of 1.07 and standard deviation of 20.82% for the trailing three-year period, making it a medium risk choice in the space. With about 346 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. MidCap Dividend ETF is an excellent option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Russell Mid-Cap Value ETF (IWS - Free Report) tracks Russell MidCap Value Index and the Vanguard Mid-Cap Value ETF (VOE - Free Report) tracks CRSP U.S. Mid Cap Value Index. IShares Russell Mid-Cap Value ETF has $12.21 billion in assets, Vanguard Mid-Cap Value ETF has $15.59 billion. IWS has an expense ratio of 0.23% and VOE 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 - Mid 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. MidCap Dividend ETF (DON) a Strong ETF Right Now?
The WisdomTree U.S. MidCap Dividend ETF (DON - Free Report) was launched on 06/16/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Mid 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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.
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
Managed by Wisdomtree, DON has amassed assets over $3.11 billion, making it one of the larger ETFs in the Style Box - Mid Cap Value. This particular fund seeks to match the performance of the WisdomTree U.S. MidCap Dividend Index before fees and expenses.
The WisdomTree U.S. MidCap Dividend Index is a fundamentally weighted index that measures the performance of the mid-capitalization segment of the US dividend-paying market.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for DON are 0.38%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.04%.
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.
For DON, it has heaviest allocation in the Financials sector --about 22.90% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Packaging Corp Of America (PKG - Free Report) accounts for about 1.12% of the fund's total assets, followed by Chesapeake Energy Corp (CHK - Free Report) and Paramount Global - Class B (PARA - Free Report) .
DON's top 10 holdings account for about 9.38% of its total assets under management.
Performance and Risk
The ETF has lost about -1.49% and is down about -4.37% so far this year and in the past one year (as of 06/06/2023), respectively. DON has traded between $37.67 and $45.40 during this last 52-week period.
The ETF has a beta of 1.07 and standard deviation of 20.82% for the trailing three-year period, making it a medium risk choice in the space. With about 346 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. MidCap Dividend ETF is an excellent option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Russell Mid-Cap Value ETF (IWS - Free Report) tracks Russell MidCap Value Index and the Vanguard Mid-Cap Value ETF (VOE - Free Report) tracks CRSP U.S. Mid Cap Value Index. IShares Russell Mid-Cap Value ETF has $12.21 billion in assets, Vanguard Mid-Cap Value ETF has $15.59 billion. IWS has an expense ratio of 0.23% and VOE 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 - Mid 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.