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Is WisdomTree U.S. SmallCap Dividend ETF (DES) a Strong ETF Right Now?
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The WisdomTree U.S. SmallCap Dividend ETF (DES - Free Report) made its debut on 06/16/2006, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small 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.
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.
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.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Wisdomtree, DES has amassed assets over $1.78 billion, making it one of the average sized ETFs in the Style Box - Small Cap Value. DES seeks to match the performance of the WisdomTree U.S. SmallCap Dividend Index before fees and expenses.
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
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 0.38%.
The fund has a 12-month trailing dividend yield of 2.81%.
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.
For DES, it has heaviest allocation in the Financials sector --about 22.20% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Consol Energy Inc (CEIX - Free Report) accounts for about 1.22% of total assets, followed by Cogent Communications Hldgs (CCOI - Free Report) and Radian Group Inc (RDN - Free Report) .
Its top 10 holdings account for approximately 8.59% of DES's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. SmallCap Dividend ETF has added about 4.27% so far, and is down about -1.09% over the last 12 months (as of 11/24/2023). DES has traded between $26.55 and $32.13 in this past 52-week period.
DES has a beta of 1.12 and standard deviation of 20.08% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 615 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
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 $10.75 billion in assets, Vanguard Small-Cap Value ETF has $24.39 billion. IWN has an expense ratio of 0.24% 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?
The WisdomTree U.S. SmallCap Dividend ETF (DES - Free Report) made its debut on 06/16/2006, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small 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.
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.
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.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Wisdomtree, DES has amassed assets over $1.78 billion, making it one of the average sized ETFs in the Style Box - Small Cap Value. DES seeks to match the performance of the WisdomTree U.S. SmallCap Dividend Index before fees and expenses.
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
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 0.38%.
The fund has a 12-month trailing dividend yield of 2.81%.
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.
For DES, it has heaviest allocation in the Financials sector --about 22.20% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Consol Energy Inc (CEIX - Free Report) accounts for about 1.22% of total assets, followed by Cogent Communications Hldgs (CCOI - Free Report) and Radian Group Inc (RDN - Free Report) .
Its top 10 holdings account for approximately 8.59% of DES's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. SmallCap Dividend ETF has added about 4.27% so far, and is down about -1.09% over the last 12 months (as of 11/24/2023). DES has traded between $26.55 and $32.13 in this past 52-week period.
DES has a beta of 1.12 and standard deviation of 20.08% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 615 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
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 $10.75 billion in assets, Vanguard Small-Cap Value ETF has $24.39 billion. IWN has an expense ratio of 0.24% 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.