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Is WisdomTree U.S. MidCap Dividend ETF (DON) a Strong ETF Right Now?
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A smart beta exchange traded fund, the WisdomTree U.S. MidCap Dividend ETF (DON - Free Report) debuted on 06/16/2006, and offers broad exposure to the Style Box - Mid Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Managed by Wisdomtree, DON has amassed assets over $3.01 billion, making it one of the larger ETFs in the Style Box - Mid Cap Value. DON, before fees and expenses, seeks to match the performance of the WisdomTree U.S. MidCap Dividend Index.
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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.38% for DON, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.99%.
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.
DON's heaviest allocation is in the Financials sector, which is about 23.80% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Chesapeake Energy Corp (CHK - Free Report) accounts for about 1.28% of the fund's total assets, followed by Packaging Corp Of America (PKG - Free Report) and Watsco Inc (WSO - Free Report) .
The top 10 holdings account for about 9.91% of total assets under management.
Performance and Risk
So far this year, DON has lost about -2.93%, and is up about 1.31% in the last one year (as of 10/24/2023). During this past 52-week period, the fund has traded between $38.91 and $45.40.
The fund has a beta of 1.07 and standard deviation of 19.50% for the trailing three-year period, which makes DON a medium risk choice in this particular space. With about 344 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. MidCap Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
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 $11.26 billion in assets, Vanguard Mid-Cap Value ETF has $14.33 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?
A smart beta exchange traded fund, the WisdomTree U.S. MidCap Dividend ETF (DON - Free Report) debuted on 06/16/2006, and offers broad exposure to the Style Box - Mid Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Managed by Wisdomtree, DON has amassed assets over $3.01 billion, making it one of the larger ETFs in the Style Box - Mid Cap Value. DON, before fees and expenses, seeks to match the performance of the WisdomTree U.S. MidCap Dividend Index.
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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.38% for DON, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.99%.
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.
DON's heaviest allocation is in the Financials sector, which is about 23.80% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Chesapeake Energy Corp (CHK - Free Report) accounts for about 1.28% of the fund's total assets, followed by Packaging Corp Of America (PKG - Free Report) and Watsco Inc (WSO - Free Report) .
The top 10 holdings account for about 9.91% of total assets under management.
Performance and Risk
So far this year, DON has lost about -2.93%, and is up about 1.31% in the last one year (as of 10/24/2023). During this past 52-week period, the fund has traded between $38.91 and $45.40.
The fund has a beta of 1.07 and standard deviation of 19.50% for the trailing three-year period, which makes DON a medium risk choice in this particular space. With about 344 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. MidCap Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
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 $11.26 billion in assets, Vanguard Mid-Cap Value ETF has $14.33 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.