We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is WisdomTree U.S. Multifactor ETF (USMF) a Strong ETF Right Now?
Read MoreHide Full Article
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?
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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track 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.
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 managed by Wisdomtree. USMF has been able to amass assets over $208.49 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. This particular fund seeks to match the performance of the WisdomTree U.S. Multifactor Index before fees and expenses.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.28%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.71%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Information Technology sector - about 28.90% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Taking into account individual holdings, Jack Henry & Associates Inc (JKHY - Free Report) accounts for about 1.48% of the fund's total assets, followed by Verizon Communications Inc (VZ - Free Report) and Omnicom Group Inc (OMC - Free Report) .
Its top 10 holdings account for approximately 13.12% of USMF's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. Multifactor ETF has lost about -11.28% so far, and is down about -4.20% over the last 12 months (as of 07/11/2022). USMF has traded between $35.27 and $42.22 in this past 52-week period.
The fund has a beta of 0.92 and standard deviation of 22.48% 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 $41.68 billion in assets, Vanguard Total Stock Market ETF has $250.27 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is WisdomTree U.S. Multifactor ETF (USMF) a Strong ETF Right Now?
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?
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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track 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.
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 managed by Wisdomtree. USMF has been able to amass assets over $208.49 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. This particular fund seeks to match the performance of the WisdomTree U.S. Multifactor Index before fees and expenses.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.28%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.71%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Information Technology sector - about 28.90% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Taking into account individual holdings, Jack Henry & Associates Inc (JKHY - Free Report) accounts for about 1.48% of the fund's total assets, followed by Verizon Communications Inc (VZ - Free Report) and Omnicom Group Inc (OMC - Free Report) .
Its top 10 holdings account for approximately 13.12% of USMF's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. Multifactor ETF has lost about -11.28% so far, and is down about -4.20% over the last 12 months (as of 07/11/2022). USMF has traded between $35.27 and $42.22 in this past 52-week period.
The fund has a beta of 0.92 and standard deviation of 22.48% 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 $41.68 billion in assets, Vanguard Total Stock Market ETF has $250.27 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.