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Is WisdomTree U.S. Multifactor ETF (USMF) a Strong ETF Right Now?

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The WisdomTree U.S. Multifactor ETF (USMF - Free Report) was launched on 06/29/2017, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Blend category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

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.

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.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

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 $363.08 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the WisdomTree U.S. Multifactor Index.

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

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.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.28%.

USMF's 12-month trailing dividend yield is 1.33%.

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 30.70% of the portfolio. Its Financials and Healthcare round out the top three.

When you look at individual holdings, Verisign Inc (VRSN - Free Report) accounts for about 1.73% of the fund's total assets, followed by Juniper Networks Inc (JNPR - Free Report) and Motorola Solutions Inc (MSI - Free Report) .

Its top 10 holdings account for approximately 13.41% of USMF's total assets under management.

Performance and Risk

The ETF has lost about -1.61% and is up roughly 10.09% so far this year and in the past one year (as of 04/30/2025), respectively. USMF has traded between $44.06 and $52.86 during this last 52-week period.

The fund has a beta of 0.85 and standard deviation of 15.07% for the trailing three-year period. With about 201 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 $64.24 billion in assets, Vanguard Total Stock Market ETF has $438.71 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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