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Is WisdomTree U.S. SmallCap Quality Dividend Growth ETF (DGRS) a Strong ETF Right Now?
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Launched on 07/25/2013, the WisdomTree U.S. SmallCap Quality Dividend Growth ETF (DGRS - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend 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.
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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 $226 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the WisdomTree U.S. SmallCap Quality Dividend Growth Index.
The WisdomTree U.S. SmallCap Quality Dividend Growth Index is a fundamentally weighted index that consists of the small-capitalization segment of dividend-paying stocks with growth characteristics.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.38%, making it on par with most peer products in the space.
DGRS's 12-month trailing dividend yield is 2.72%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
DGRS's heaviest allocation is in the Financials sector, which is about 24% of the portfolio. Its Consumer Discretionary and Industrials round out the top three.
Taking into account individual holdings, Moelis & Co - Cl A (MC - Free Report) accounts for about 1.76% of the fund's total assets, followed by Scotts Miracle-Gro Co/the (SMG - Free Report) and Arch Resources Inc (ARCH - Free Report) .
Its top 10 holdings account for approximately 15.06% of DGRS's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. SmallCap Quality Dividend Growth ETF return is roughly 6.03% so far, and is down about -5.13% over the last 12 months (as of 01/20/2023). DGRS has traded between $35.95 and $45.78 in this past 52-week period.
The ETF has a beta of 1.10 and standard deviation of 33.57% for the trailing three-year period, making it a medium risk choice in the space. With about 289 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap Quality Dividend Growth ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG - Free Report) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $24.43 billion in assets, Vanguard Dividend Appreciation ETF has $64.40 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.
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 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. SmallCap Quality Dividend Growth ETF (DGRS) a Strong ETF Right Now?
Launched on 07/25/2013, the WisdomTree U.S. SmallCap Quality Dividend Growth ETF (DGRS - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Blend 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.
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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 $226 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the WisdomTree U.S. SmallCap Quality Dividend Growth Index.
The WisdomTree U.S. SmallCap Quality Dividend Growth Index is a fundamentally weighted index that consists of the small-capitalization segment of dividend-paying stocks with growth characteristics.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.38%, making it on par with most peer products in the space.
DGRS's 12-month trailing dividend yield is 2.72%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
DGRS's heaviest allocation is in the Financials sector, which is about 24% of the portfolio. Its Consumer Discretionary and Industrials round out the top three.
Taking into account individual holdings, Moelis & Co - Cl A (MC - Free Report) accounts for about 1.76% of the fund's total assets, followed by Scotts Miracle-Gro Co/the (SMG - Free Report) and Arch Resources Inc (ARCH - Free Report) .
Its top 10 holdings account for approximately 15.06% of DGRS's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. SmallCap Quality Dividend Growth ETF return is roughly 6.03% so far, and is down about -5.13% over the last 12 months (as of 01/20/2023). DGRS has traded between $35.95 and $45.78 in this past 52-week period.
The ETF has a beta of 1.10 and standard deviation of 33.57% for the trailing three-year period, making it a medium risk choice in the space. With about 289 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap Quality Dividend Growth ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG - Free Report) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $24.43 billion in assets, Vanguard Dividend Appreciation ETF has $64.40 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.
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 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.