Yahoo Finance Is WisdomTree U.S. SmallCap Dividend ETF (DES) a Strong ETF Right Now?
The WisdomTree U.S. SmallCap Dividend ETF (DES) was launched on 06/16/2006, and is a smart beta exchange traded fund designed to offer 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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
Because the fund has amassed over $1.90 billion, this makes it one of the larger ETFs in the Style Box - Small Cap Value. DES is managed by Wisdomtree. 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.38%.
It has a 12-month trailing dividend yield of 2.75%.
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.
DES's heaviest allocation is in the Financials sector, which is about 25% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Organon & Co (OGN) accounts for about 1.33% of the fund's total assets, followed by Cvr Energy Inc (CVI) and Kohl's Corp (KSS).
The top 10 holdings account for about 8.22% of total assets under management.
Performance and Risk
The ETF has lost about -0.79% so far this year and was up about 20.29% in the last one year (as of 05/27/2024). In the past 52-week period, it has traded between $26.55 and $32.72.
The fund has a beta of 1.11 and standard deviation of 19.55% for the trailing three-year period, which makes DES a medium risk choice in this particular space. With about 602 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.
IShares Russell 2000 Value ETF (IWN) tracks Russell 2000 Value Index and the Vanguard Small-Cap Value ETF (VBR) tracks CRSP U.S. Small Cap Value Index. IShares Russell 2000 Value ETF has $11.75 billion in assets, Vanguard Small-Cap Value ETF has $28.35 billion. IWN has an expense ratio of 0.24% 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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WisdomTree U.S. SmallCap Dividend ETF (DES): ETF Research Reports
Kohl's Corporation (KSS) : Free Stock Analysis Report
CVR Energy Inc. (CVI) : Free Stock Analysis Report
Vanguard Small-Cap Value ETF (VBR): ETF Research Reports
iShares Russell 2000 Value ETF (IWN): ETF Research Reports
Organon & Co. (OGN) : Free Stock Analysis Report