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Is WisdomTree U.S. SmallCap Dividend ETF (DES) a Strong ETF Right Now?
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Making its debut on 06/16/2006, smart beta exchange traded fund WisdomTree U.S. SmallCap Dividend ETF (DES - Free Report) provides investors broad exposure to the Style Box - Small Cap Value 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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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
The fund is managed by Wisdomtree. DES has been able to amass assets over $2.17 billion, making it one of the larger ETFs in the Style Box - Small Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the WisdomTree U.S. SmallCap Dividend Index.
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.
Operating expenses on an annual basis are 0.38% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.88%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Representing 30.10% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Organon & Co (OGN - Free Report) accounts for about 1.20% of the fund's total assets, followed by Tfs Financial Corp (TFSL - Free Report) and Viper Energy Inc (VNOM - Free Report) .
DES's top 10 holdings account for about 7.95% of its total assets under management.
Performance and Risk
The ETF return is roughly 16.34% and was up about 23.82% so far this year and in the past one year (as of 12/10/2024), respectively. DES has traded between $30.25 and $37.69 during this last 52-week period.
The fund has a beta of 1.10 and standard deviation of 19.97% for the trailing three-year period, which makes DES a medium risk choice in this particular space. With about 585 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.
Avantis U.S. Small Cap Value ETF (AVUV - Free Report) tracks ---------------------------------------- and the Vanguard Small-Cap Value ETF (VBR - Free Report) tracks CRSP U.S. Small Cap Value Index. Avantis U.S. Small Cap Value ETF has $16 billion in assets, Vanguard Small-Cap Value ETF has $32.90 billion. AVUV has an expense ratio of 0.25% 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?
Making its debut on 06/16/2006, smart beta exchange traded fund WisdomTree U.S. SmallCap Dividend ETF (DES - Free Report) provides investors broad exposure to the Style Box - Small Cap Value 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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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
The fund is managed by Wisdomtree. DES has been able to amass assets over $2.17 billion, making it one of the larger ETFs in the Style Box - Small Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the WisdomTree U.S. SmallCap Dividend Index.
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.
Operating expenses on an annual basis are 0.38% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.88%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Representing 30.10% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Organon & Co (OGN - Free Report) accounts for about 1.20% of the fund's total assets, followed by Tfs Financial Corp (TFSL - Free Report) and Viper Energy Inc (VNOM - Free Report) .
DES's top 10 holdings account for about 7.95% of its total assets under management.
Performance and Risk
The ETF return is roughly 16.34% and was up about 23.82% so far this year and in the past one year (as of 12/10/2024), respectively. DES has traded between $30.25 and $37.69 during this last 52-week period.
The fund has a beta of 1.10 and standard deviation of 19.97% for the trailing three-year period, which makes DES a medium risk choice in this particular space. With about 585 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.
Avantis U.S. Small Cap Value ETF (AVUV - Free Report) tracks ---------------------------------------- and the Vanguard Small-Cap Value ETF (VBR - Free Report) tracks CRSP U.S. Small Cap Value Index. Avantis U.S. Small Cap Value ETF has $16 billion in assets, Vanguard Small-Cap Value ETF has $32.90 billion. AVUV has an expense ratio of 0.25% 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.