The WisdomTree U.S. LargeCap ETF (EPS) made its debut on 02/23/2007, and is a smart beta exchange traded fund that provides broad exposure to the Style Box – Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you’re the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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.
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
Managed by Wisdomtree, EPS has amassed assets over $603.31 million, making it one of the average sized ETFs in the Style Box – Large Cap Value. EPS seeks to match the performance of the WisdomTree U.S. Earnings 500 Index before fees and expenses.
The WisdomTree U.S. Earnings 500 Index is a fundamentally weighted index that measures the performance of earnings-generating companies within the large-capitalization segment of the U.S. Stock Market.
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.
Annual operating expenses for EPS are 0.08%, which makes it one of the least expensive products in the space.
It’s 12-month trailing dividend yield comes in at 1.58%.
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 Information Technology sector – about 24% of the portfolio. Financials and Healthcare round out the top three.
When you look at individual holdings, Apple Inc (AAPL) accounts for about 4.73% of the fund’s total assets, followed by Microsoft Corp (MSFT) and Alphabet Inc-Cl A (GOOGL).
Its top 10 holdings account for approximately 26.98% of EPS’s total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. LargeCap ETF has added about 19.87% so far, and was up about 30.74% over the last 12 months (as of 10/11/2021). EPS has traded between $34.44 and $48.62 in this past 52-week period.
EPS has a beta of 1.04 and standard deviation of 23.10% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 502 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. LargeCap ETF is a reasonable option for investors seeking to outperform the Style Box – Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
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 $54.69 billion in assets, Vanguard Value ETF has $83.86 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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