Making its debut on 06/16/2006, smart beta exchange traded fund WisdomTree U.S. MidCap Dividend ETF (DON) provides investors broad exposure to the Style Box - Mid Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Wisdomtree, and has been able to amass over $3.71 billion, which makes it one of the larger ETFs in the Style Box - Mid Cap Value. Before fees and expenses, DON seeks to match the performance of the WisdomTree U.S. MidCap Dividend Index.
The WisdomTree U.S. MidCap Dividend Index is a fundamentally weighted index that measures the performance of the mid-capitalization segment of the US dividend-paying market.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.38% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.28%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For DON, it has heaviest allocation in the Financials sector --about 25.90% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Vistra Corp (VST) accounts for about 1.89% of the fund's total assets, followed by International Paper Co (IP) and Corebridge Financial Inc (CRBG).
The top 10 holdings account for about 10.83% of total assets under management.
Performance and Risk
The ETF has lost about -0.47% so far this year and is up about 14.92% in the last one year (as of 01/08/2025). In the past 52-week period, it has traded between $44.21 and $55.55.
The ETF has a beta of 1.08 and standard deviation of 18.15% for the trailing three-year period, making it a medium risk choice in the space. With about 333 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. MidCap Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell Mid-Cap Value ETF (IWS) tracks Russell MidCap Value Index and the Vanguard Mid-Cap Value ETF (VOE) tracks CRSP U.S. Mid Cap Value Index. IShares Russell Mid-Cap Value ETF has $13.60 billion in assets, Vanguard Mid-Cap Value ETF has $17.33 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
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 - Mid Cap Value.
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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Get it free >>WisdomTree U.S. MidCap Dividend ETF (DON): ETF Research Reports
International Paper Company (IP) : Free Stock Analysis Report
Vanguard Mid-Cap Value ETF (VOE): ETF Research Reports
iShares Russell Mid-Cap Value ETF (IWS): ETF Research Reports
Vistra Corp. (VST) : Free Stock Analysis Report
Corebridge Financial, Inc. (CRBG) : 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.
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