The WisdomTree U.S. SmallCap Quality Dividend Growth ETF (DGRS) was launched on 07/25/2013, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Small 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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 $447.81 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, DGRS 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.38% for this ETF, which makes it on par with most peer products in the space.
DGRS's 12-month trailing dividend yield is 2.08%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 26% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Western Union Co/the (WU) accounts for about 2.16% of total assets, followed by Manpower Inc (MAN) and Polaris Inc (PII).
The top 10 holdings account for about 17.3% of total assets under management.
Performance and Risk
So far this year, DGRS has lost about -0.24%, and is up roughly 13.49% in the last one year (as of 02/14/2025). During this past 52-week period, the fund has traded between $46.13 and $56.61.
The fund has a beta of 1.12 and standard deviation of 20.42% for the trailing three-year period, which makes DGRS a medium risk choice in this particular space. With about 221 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) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $31.77 billion in assets, Vanguard Dividend Appreciation ETF has $90.44 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.05%.
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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Get it free >>WisdomTree U.S. SmallCap Quality Dividend Growth ETF (DGRS): ETF Research Reports
ManpowerGroup Inc. (MAN) : Free Stock Analysis Report
The Western Union Company (WU) : Free Stock Analysis Report
Polaris Inc. (PII) : Free Stock Analysis Report
Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports
iShares Core Dividend Growth ETF (DGRO): ETF Research Reports
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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.
