Launched on 02/23/2007, the WisdomTree U.S. SmallCap ETF (EES) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Value segment of the US equity market.
The fund is sponsored by Wisdomtree. It has amassed assets over $671.58 million, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
Small cap companies have market capitalization below $2 billion. They usually have higher potential than large and mid cap companies with stocks but higher risk.
While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.38%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.37%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 26.30% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Valaris Ltd (G9460G101) accounts for about 0.78% of total assets, followed by Academy Sports & Outdoors Inc (ASO) and Brighthouse Financial Inc (BHF).
The top 10 holdings account for about 6.18% of total assets under management.
Performance and Risk
EES seeks to match the performance of the WisdomTree U.S. SmallCap Earnings Index before fees and expenses. The WisdomTree U.S. SmallCap Index is a fundamentally weighted index that measures the performance of earnings-generating companies within the small-capitalization segment of the U.S. Stock Market.
The ETF has gained about 0.61% so far this year and is up roughly 16.06% in the last one year (as of 02/04/2025). In the past 52-week period, it has traded between $45.98 and $58.78.
The ETF has a beta of 1.25 and standard deviation of 22.01% for the trailing three-year period, making it a medium risk choice in the space. With about 932 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, EES is a good option for those seeking exposure to the Style Box - Small Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The Avantis U.S. Small Cap Value ETF (AVUV) and the Vanguard Small-Cap Value ETF (VBR) track a similar index. While Avantis U.S. Small Cap Value ETF has $15.75 billion in assets, Vanguard Small-Cap Value ETF has $31.81 billion. AVUV has an expense ratio of 0.25% and VBR charges 0.07%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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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Get it free >>WisdomTree U.S. SmallCap ETF (EES): ETF Research Reports
Vanguard Small-Cap Value ETF (VBR): ETF Research Reports
Brighthouse Financial, Inc. (BHF) : Free Stock Analysis Report
Avantis U.S. Small Cap Value ETF (AVUV): ETF Research Reports
Academy Sports and Outdoors, Inc. (ASO) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
