Launched on 06/16/2006, the WisdomTree U.S. LargeCap Dividend ETF (DLN) is a smart beta exchange traded fund offering 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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
Because the fund has amassed over $3.36 billion, this makes it one of the average sized ETFs in the Style Box – Large Cap Value. DLN is managed by Wisdomtree. DLN seeks to match the performance of the WisdomTree U.S. LargeCap Dividend Index before fees and expenses.
The WisdomTree U.S. LargeCap Dividend Index is a fundamentally weighted index that measures the performance of the large-capitalization segment of the U.S. dividend-paying market.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for DLN are 0.28%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.01%.
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 DLN, it has heaviest allocation in the Information Technology sector –about 23.50% of the portfolio –while Healthcare and Consumer Staples round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 6.34% of total assets, followed by Apple Inc (AAPL) and Johnson & Johnson (JNJ).
The top 10 holdings account for about 29.38% of total assets under management.
Performance and Risk
So far this year, DLN has lost about -0.06%, and was up about 24.09% in the last one year (as of 01/17/2022). During this past 52-week period, the fund has traded between $53.03 and $66.73.
The ETF has a beta of 0.96 and standard deviation of 21.98% for the trailing three-year period, making it a medium risk choice in the space. With about 296 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. LargeCap 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 $59.53 billion in assets, Vanguard Value ETF has $93.92 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
.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How to Profit from Trillions on Spending for Infrastructure >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report