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Is WisdomTree U.S. SmallCap Quality Dividend Growth ETF (DGRS) a Strong ETF Right Now?
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Launched on 07/25/2013, the WisdomTree U.S. SmallCap Quality Dividend Growth ETF (DGRS - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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 sponsored by Wisdomtree. It has amassed assets over $272.58 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund seeks to match the performance of the WisdomTree U.S. SmallCap Quality Dividend Growth Index before fees and expenses.
The WisdomTree U.S. SmallCap Quality Dividend Growth Index is a fundamentally weighted index that consists of the small-capitalization segment of dividend-paying stocks with growth characteristics.
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 DGRS, making it on par with most peer products in the space.
DGRS's 12-month trailing dividend yield is 2.72%.
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.
This ETF has heaviest allocation in the Financials sector - about 23.30% of the portfolio. Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Consol Energy Inc (CEIX - Free Report) accounts for about 2.69% of total assets, followed by Arch Resources Inc (ARCH - Free Report) and Moelis & Co - Cl A (MC - Free Report) .
Its top 10 holdings account for approximately 17.04% of DGRS's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. SmallCap Quality Dividend Growth ETF has added about 7.44% so far, and is up about 2.94% over the last 12 months (as of 11/29/2023). DGRS has traded between $38.52 and $46.79 in this past 52-week period.
The fund has a beta of 1.14 and standard deviation of 20.74% for the trailing three-year period, which makes DGRS a medium risk choice in this particular space. With about 282 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap Quality Dividend Growth ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG - Free Report) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $24.07 billion in assets, Vanguard Dividend Appreciation ETF has $69.98 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.
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 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. SmallCap Quality Dividend Growth ETF (DGRS) a Strong ETF Right Now?
Launched on 07/25/2013, the WisdomTree U.S. SmallCap Quality Dividend Growth ETF (DGRS - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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 sponsored by Wisdomtree. It has amassed assets over $272.58 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund seeks to match the performance of the WisdomTree U.S. SmallCap Quality Dividend Growth Index before fees and expenses.
The WisdomTree U.S. SmallCap Quality Dividend Growth Index is a fundamentally weighted index that consists of the small-capitalization segment of dividend-paying stocks with growth characteristics.
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 DGRS, making it on par with most peer products in the space.
DGRS's 12-month trailing dividend yield is 2.72%.
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.
This ETF has heaviest allocation in the Financials sector - about 23.30% of the portfolio. Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Consol Energy Inc (CEIX - Free Report) accounts for about 2.69% of total assets, followed by Arch Resources Inc (ARCH - Free Report) and Moelis & Co - Cl A (MC - Free Report) .
Its top 10 holdings account for approximately 17.04% of DGRS's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. SmallCap Quality Dividend Growth ETF has added about 7.44% so far, and is up about 2.94% over the last 12 months (as of 11/29/2023). DGRS has traded between $38.52 and $46.79 in this past 52-week period.
The fund has a beta of 1.14 and standard deviation of 20.74% for the trailing three-year period, which makes DGRS a medium risk choice in this particular space. With about 282 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap Quality Dividend Growth ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG - Free Report) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $24.07 billion in assets, Vanguard Dividend Appreciation ETF has $69.98 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.
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 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.