Making its debut on 06/16/2006, smart beta exchange traded fund WisdomTree U.S. Total Dividend ETF (DTD) provides investors broad exposure to the Style Box – Large Cap Value 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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Wisdomtree. DTD has been able to amass assets over $1.01 billion, making it one of the average sized ETFs in the Style Box – Large Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the WisdomTree U.S. Dividend Index.
The WisdomTree U.S. Dividend Index is a fundamentally-weighted index that defines the dividend-paying portion of the U.S. equity market.
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.28%.
It has a 12-month trailing dividend yield of 2.56%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it’s still important for investors to research a fund’s holdings.
This ETF has heaviest allocation in the Healthcare sector – about 16.30% of the portfolio. Consumer Staples and Financials round out the top three.
When you look at individual holdings, Microsoft Corp (MSFT) accounts for about 3.95% of the fund’s total assets, followed by Apple Inc (AAPL) and Exxon Mobil Corp (XOM).
The top 10 holdings account for about 25.42% of total assets under management.
Performance and Risk
So far this year, DTD has lost about -10.70%, and is down about -2.04% in the last one year (as of 07/15/2022). During this past 52-week period, the fund has traded between $56.16 and $65.68.
The fund has a beta of 0.92 and standard deviation of 22.76% for the trailing three-year period, which makes DTD a medium risk choice in this particular space. With about 644 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. Total Dividend ETF is an excellent option for investors seeking to outperform the Style Box – Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Russell 1000 Value ETF (IWD) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $50.06 billion in assets, Vanguard Value ETF has $91.96 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
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 – Large 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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