The WisdomTree US SmallCap Dividend ETF (DES) is a passively managed exchange-traded fund that was launched on June 16, 2006 and is designed to provide broad exposure to the small cap value segment of the US equity market.
This fund is sponsored by Wisdomtree. With over $1.94 billion in assets, he is one of the largest ETFs to rival the small cap value segment of the US stock market.
Why Small Cap Value
The higher the probability, the higher the risk. Small-cap companies with a market capitalization of less than $2 billion epitomize this thinking.
Value stocks have lower-than-average price-to-earnings and price-to-book ratios, as well as lower-than-average sales and earnings growth. When considering long-term performance, value stocks outperform growth stocks in almost every market. However, they are more likely to underperform growth stocks in a bull market.
cost
Cost is an important factor in choosing the right ETF, and all other fundamentals being equal, cheaper funds can outperform more expensive ones significantly.
The annual operating cost of this ETF is 0.38%, comparable to most similar products in the space.
The 12-month trailing dividend yield is 2.73%.
Sector exposure and top holdings
ETFs offer a wide variety of exposures that minimize the risk of a single stock, but it is still important to examine a fund’s holdings before investing. Fortunately, most ETFs are highly transparent. It is an expensive commodity and we disclose our holdings daily.
This ETF has the largest allocation to the financial sector, accounting for approximately 23.80% of the portfolio. The top three positions are rounded out by Industrial and Consumer Discretionary.
Looking at individual holdings, Epr Properties (EPR) accounts for about 0.81% of total assets, followed by Cogent Communications Hldgs (CCOI) and Arch Resources Inc (ARCH).
The top 10 stocks account for approximately 6.89% of total assets under management.
performance and risk
DES seeks to match the performance before fees and expenses of the WisdomTree US SmallCap Dividend Index. The WisdomTree US SmallCap Dividend Index is a fundamentally weighted index that measures the performance of the small-cap segment of the US dividend payment market.
The ETF has returned about 5.80% so far this year, down about -2.09% over the past year (as of 23 January 2023). Over the past 52 weeks, it has traded between $25.74 and $32.61.
The ETF’s beta is 1.09, with a standard deviation of 30.70% over the past three years, making it a medium-risk option in this space. It holds approximately 631 shares and effectively spreads company-specific risks.
Alternative proposal
The WisdomTree US SmallCap Dividend ETF holds the Zacks ETF Rank 1 (Strong Buy). This is based on factors such as expected asset class returns, expense ratios and momentum. This makes DES an excellent option for investors seeking exposure to the style box – small cap value segment of the market. There are other additional ETFs in the space that investors can consider as well.
The iShares Russell 2000 Value ETF (IWN) and Vanguard SmallCap Value ETF (VBR) track similar indices. The iShares Russell 2000 Value ETF has $12.34 billion in assets, while the Vanguard SmallCap Value ETF has $25.06 billion in assets. The IWN expense ratio is 0.23% and the VBR fee is 0.07%.
bottom line
Retail and institutional investors are increasingly turning to passively managed ETFs, which offer low cost, transparency, flexibility and tax savings. This kind of fund is also a great vehicle for long-term investors.
Visit the Zacks ETF Center to learn more about this and other ETFs, select products that meet your investment objectives, and read articles about the latest developments in the ETF investment universe.
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WisdomTree US SmallCap Dividend ETF (DES): ETF Research Report
EPR Properties (EPR): Free Stock Analysis Report
Cogent Communications Holdings, Inc. (CCOI): Free Stock Analysis Report
Vanguard Small Cap Value ETF (VBR): ETF Research Report
iShares Russell 2000 Value ETF (IWN): ETF Research Report
Arch Resources Inc. (ARCH) : Free Inventory Analysis Report
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