The WisdomTree U.S. SmallCap Dividend ETF (DES) was launched on 06/16/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Small Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
DES is managed by Wisdomtree, and this fund has amassed over $2 billion, which makes it one of the larger ETFs in the Style Box - Small Cap Value. DES, before fees and expenses, seeks to match the performance of the WisdomTree U.S. SmallCap Dividend Index.
The WisdomTree U.S. SmallCap Dividend Index is a fundamentally weighted index measuring the performance of the small-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.
Annual operating expenses for this ETF are 0.38%, making it on par with most peer products in the space.
DES's 12-month trailing dividend yield is 2.82%.
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.
For DES, it has heaviest allocation in the Financials sector --about 25.70% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Sabra Health Care Reit Inc (SBRA) accounts for about 1.07% of the fund's total assets, followed by Organon & Co (OGN) and Spire Inc (SR).
Its top 10 holdings account for approximately 9.15% of DES's total assets under management.
Performance and Risk
The ETF has lost about -0.42% so far this year and was up about 15.68% in the last one year (as of 02/10/2025). In the past 52-week period, it has traded between $30.34 and $37.69.
DES has a beta of 1.10 and standard deviation of 20% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 591 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Avantis U.S. Small Cap Value ETF (AVUV) tracks ---------------------------------------- and the Vanguard Small-Cap Value ETF (VBR) tracks CRSP U.S. Small Cap Value Index. Avantis U.S. Small Cap Value ETF has $15.95 billion in assets, Vanguard Small-Cap Value ETF has $31.80 billion. AVUV has an expense ratio of 0.25% and VBR 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 - Small 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. SmallCap Dividend ETF (DES): ETF Research Reports
Sabra Healthcare REIT, Inc. (SBRA) : Free Stock Analysis Report
Spire Inc. (SR) : Free Stock Analysis Report
Vanguard Small-Cap Value ETF (VBR): ETF Research Reports
Avantis U.S. Small Cap Value ETF (AVUV): ETF Research Reports
Organon & Co. (OGN) : 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.
