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Is WisdomTree U.S. Multifactor ETF (USMF) a Strong ETF Right Now?
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Making its debut on 06/29/2017, smart beta exchange traded fund WisdomTree U.S. Multifactor ETF (USMF - Free Report) provides investors broad exposure to the Style Box - All Cap Blend 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
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 $274.05 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. This particular fund seeks to match the performance of the WisdomTree U.S. Multifactor Index before fees and expenses.
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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things 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.
USMF's 12-month trailing dividend yield is 1.29%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
USMF's heaviest allocation is in the Information Technology sector, which is about 30.10% of the portfolio. Its Financials and Healthcare round out the top three.
When you look at individual holdings, International Business Machines Corp (IBM - Free Report) accounts for about 1.46% of the fund's total assets, followed by Cisco Systems Inc (CSCO - Free Report) and Verisign Inc (VRSN - Free Report) .
The top 10 holdings account for about 12.19% of total assets under management.
Performance and Risk
The ETF has gained about 3.44% so far this year and is up about 12.05% in the last one year (as of 02/06/2024). In the past 52-week period, it has traded between $35.65 and $43.81.
The ETF has a beta of 0.89 and standard deviation of 15.05% 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 $50.89 billion in assets, Vanguard Total Stock Market ETF has $357.89 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?
Making its debut on 06/29/2017, smart beta exchange traded fund WisdomTree U.S. Multifactor ETF (USMF - Free Report) provides investors broad exposure to the Style Box - All Cap Blend 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
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 $274.05 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. This particular fund seeks to match the performance of the WisdomTree U.S. Multifactor Index before fees and expenses.
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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things 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.
USMF's 12-month trailing dividend yield is 1.29%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
USMF's heaviest allocation is in the Information Technology sector, which is about 30.10% of the portfolio. Its Financials and Healthcare round out the top three.
When you look at individual holdings, International Business Machines Corp (IBM - Free Report) accounts for about 1.46% of the fund's total assets, followed by Cisco Systems Inc (CSCO - Free Report) and Verisign Inc (VRSN - Free Report) .
The top 10 holdings account for about 12.19% of total assets under management.
Performance and Risk
The ETF has gained about 3.44% so far this year and is up about 12.05% in the last one year (as of 02/06/2024). In the past 52-week period, it has traded between $35.65 and $43.81.
The ETF has a beta of 0.89 and standard deviation of 15.05% 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 $50.89 billion in assets, Vanguard Total Stock Market ETF has $357.89 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.