Is WisdomTree U.S. LargeCap ETF (EPS) a Strong ETF Right Now?

A smart beta exchange traded fund, the WisdomTree U.S. LargeCap ETF (EPS) debuted on 02/23/2007, and offers 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.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

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.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

The fund is managed by Wisdomtree. EPS has been able to amass assets over $820.84 million, making it one of the average sized ETFs in the Style Box - Large Cap Value. EPS, before fees and expenses, seeks to match the performance of the WisdomTree U.S. Earnings 500 Index.

The WisdomTree U.S. LargeCap 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

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

Annual operating expenses for EPS are 0.08%, which makes it one of the least expensive products in the space.

EPS's 12-month trailing dividend yield is 1.59%.

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 Information Technology sector - about 25.90% of the portfolio. Financials and Healthcare round out the top three.

When you look at individual holdings, Microsoft Corp (MSFT) accounts for about 5.59% of the fund's total assets, followed by Apple Inc (AAPL) and Alphabet Inc-Cl A (GOOGL).

The top 10 holdings account for about 31.27% of total assets under management.

Performance and Risk

The ETF has gained about 8.47% and is up about 32.53% so far this year and in the past one year (as of 03/13/2024), respectively. EPS has traded between $41.64 and $54.36 during this last 52-week period.

The ETF has a beta of 1 and standard deviation of 16.46% for the trailing three-year period, making it a medium risk choice in the space. With about 500 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 $54.85 billion in assets, Vanguard Value ETF has $113.22 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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WisdomTree U.S. LargeCap ETF (EPS): ETF Research Reports

Apple Inc. (AAPL) : Free Stock Analysis Report

Microsoft Corporation (MSFT) : Free Stock Analysis Report

Alphabet Inc. (GOOGL) : Free Stock Analysis Report

Vanguard Value ETF (VTV): ETF Research Reports

iShares Russell 1000 Value ETF (IWD): ETF Research Reports

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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