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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) made its debut on 06/29/2017, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Wisdomtree. It has amassed assets over $214.78 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
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.
Operating expenses on an annual basis are 0.28% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.51%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 28.30% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Verizon Communications Inc (VZ - Free Report) accounts for about 1.44% of total assets, followed by Jack Henry & Associates Inc (JKHY - Free Report) and Omnicom Group Inc (OMC - Free Report) .
The top 10 holdings account for about 13.11% of total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. Multifactor ETF has lost about -5.98% so far, and is up about 7.30% over the last 12 months (as of 03/11/2022). USMF has traded between $37.10 and $42.22 in this past 52-week period.
USMF has a beta of 0.94 and standard deviation of 21.53% for the trailing three-year period. With about 198 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 $41.92 billion in assets, Vanguard Total Stock Market ETF has $269.75 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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Is WisdomTree U.S. Multifactor ETF (USMF) a Strong ETF Right Now?
The WisdomTree U.S. Multifactor ETF (USMF - Free Report) made its debut on 06/29/2017, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Wisdomtree. It has amassed assets over $214.78 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
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.
Operating expenses on an annual basis are 0.28% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.51%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 28.30% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Verizon Communications Inc (VZ - Free Report) accounts for about 1.44% of total assets, followed by Jack Henry & Associates Inc (JKHY - Free Report) and Omnicom Group Inc (OMC - Free Report) .
The top 10 holdings account for about 13.11% of total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. Multifactor ETF has lost about -5.98% so far, and is up about 7.30% over the last 12 months (as of 03/11/2022). USMF has traded between $37.10 and $42.22 in this past 52-week period.
USMF has a beta of 0.94 and standard deviation of 21.53% for the trailing three-year period. With about 198 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 $41.92 billion in assets, Vanguard Total Stock Market ETF has $269.75 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.