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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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
DON is managed by Wisdomtree, and this fund has amassed over $3.51 billion, which makes 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
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 0.38% for DON, making it on par with most peer products in the space.
DON's 12-month trailing dividend yield is 2.44%.
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 24.10% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Vistra Corp (VST - Free Report) accounts for about 1.22% of the fund's total assets, followed by Corebridge Financial Inc (CRBG - Free Report) and Packaging Corp Of America (PKG - Free Report) .
Its top 10 holdings account for approximately 9.64% of DON's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. MidCap Dividend ETF return is roughly 3.53% so far, and was up about 17.43% over the last 12 months (as of 04/30/2024). DON has traded between $38.70 and $48.77 in this past 52-week period.
The ETF has a beta of 1.07 and standard deviation of 18.54% for the trailing three-year period, making it a medium risk choice in the space. With about 334 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 $12.63 billion in assets, Vanguard Mid-Cap Value ETF has $16.11 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
DON is managed by Wisdomtree, and this fund has amassed over $3.51 billion, which makes 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
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 0.38% for DON, making it on par with most peer products in the space.
DON's 12-month trailing dividend yield is 2.44%.
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 24.10% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Vistra Corp (VST - Free Report) accounts for about 1.22% of the fund's total assets, followed by Corebridge Financial Inc (CRBG - Free Report) and Packaging Corp Of America (PKG - Free Report) .
Its top 10 holdings account for approximately 9.64% of DON's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. MidCap Dividend ETF return is roughly 3.53% so far, and was up about 17.43% over the last 12 months (as of 04/30/2024). DON has traded between $38.70 and $48.77 in this past 52-week period.
The ETF has a beta of 1.07 and standard deviation of 18.54% for the trailing three-year period, making it a medium risk choice in the space. With about 334 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 $12.63 billion in assets, Vanguard Mid-Cap Value ETF has $16.11 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.