Launched on July 25, 2013, the WisdomTree US SmallCap Quality Dividend Growth ETF (DGRS) is a smart beta exchange-traded fund that offers broad exposure to the Style Box – Small Cap Blend category of the market.
What are Smart Beta ETFs?
The ETF industry has long been flooded with products based on market capitalization weighted indices designed to represent a broader market or a specific market segment.
Market Cap Weighted Indices are perfect for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way to replicate market returns.
However, some investors believe they can beat the market with good stock selection. This group may invest in another class of funds called smart betas that track non-cap weighted strategies.
By seeking to select stocks with high risk-return performance potential, uncap-weighted indices are based on certain fundamental characteristics, or combinations thereof.
This area offers a variety of investment options, including the simplest equal weighting, fundamental weighting and volatility/momentum based weighting methods. However, not all of these strategies yield excellent results.
Fund Sponsor & Index
This fund is sponsored by Wisdomtree. It has amassed over $226 million in assets, making it one of his medium-sized ETFs in the Stylebox-Small Cap blend. This particular fund seeks to match the performance of the WisdomTree US SmallCap Quality Dividend Growth Index before fees and expenses.
The WisdomTree US SmallCap Quality Dividend Growth Index is a fundamentally weighted index composed of a small-cap segment of dividend-paying stocks with growth characteristics.
Expenses and Other Expenses
Investors should also pay attention to the ETF’s expense ratio. Assuming all other metrics are equal, low-cost products produce better results than high-cost products.
The annual operating cost of this ETF is 0.38%, comparable to most similar products in the space.
DGRS has a 12-month trailing dividend yield of 2.72%.
Sector exposure and top holdings
ETFs offer a diversified exposure that minimizes the risk of a single stock, but investors should also look at the actual holdings within the fund. Fortunately, most ETFs are highly transparent products, disclosing their holdings on a daily basis.
DGRS’s largest allocation is in the financial sector, around 24% of the portfolio. Consumer Discretionary and Industrial round out the top three.
Taking into account individual holdings, Moelis & Co – Cl A (MC) accounts for approximately 1.76% of the Fund’s total assets, followed by Scotts Miracle-Gro Co/the (SMG) and Arch Resources Inc (ARCH). increase.
The holdings of the top 10 stocks account for approximately 15.06% of DGRS’s total assets under management.
performance and risk
The WisdomTree US SmallCap Quality Dividend Growth ETF has returned about 6.03% year-to-date, down about -5.13% over the past 12 months (as of January 20, 2023). DGRS has been trading between $35.95 and $45.78 over the past 52 weeks.
The ETF’s beta is 1.10, with a standard deviation of 33.57% over the past three years, making it a medium-risk option in this space. It holds approximately 289 shares and effectively spreads company-specific risks.
Alternative proposal
The WisdomTree US SmallCap Quality Dividend Growth ETF is a reasonable option for investors looking to outperform the Style Box – Small Cap Blend segment of the market. However, there are other areas of his ETFs that investors can consider.
The IShares Core Dividend Growth ETF (DGRO) tracks the Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG) tracks the NASDAQ US Dividend Achievers Select Index. The IShares Core Dividend Growth ETF has assets of $24.43 billion and the Vanguard Dividend Appreciation ETF has assets of $64.4 billion. DGRO’s expense ratio is 0.08% and VIG’s is 0.06%.
Investors looking for a cheaper, less risky option should consider traditional cap-weighted ETFs that aim to match the returns of style box-small cap blends.
Conclusion
Visit the Zacks ETF Center to learn more about this and other ETFs, select products that match your investment objectives, and read articles on the latest developments in the ETF investment universe.
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WisdomTree US SmallCap Quality Dividend Growth ETF (DGRS): ETF Research Report
Scotts MiracleGro Company (SMG): Free Stock Analysis Report
Moelis & Company (MC) : Free Stock Analysis Report
Vanguard Dividend Appreciation ETF (VIG): ETF Research Report
iShares Core Dividend Growth ETF (DGRO): ETF Research Report
Arch Resources Inc. (ARCH) : Free Inventory Analysis Report
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