Is WisdomTree U.S. MidCap Dividend ETF (DON) a Strong ETF Right Now?
The WisdomTree U.S. MidCap Dividend ETF (DON) was launched on 06/16/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Mid Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
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
DON is managed by Wisdomtree, and this fund has amassed over $3.46 billion, which makes it one of the larger ETFs in the Style Box - Mid Cap Value. DON, before fees and expenses, seeks to match the performance of the WisdomTree U.S. MidCap Dividend Index.
The WisdomTree U.S. MidCap Dividend Index is a fundamentally weighted index that measures the performance of the mid-capitalization segment of the US dividend-paying market.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.38%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.54%.
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.
DON's heaviest allocation is in the Financials sector, which is about 24.10% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Franklin Resources Inc (BEN) accounts for about 0.99% of the fund's total assets, followed by Wp Carey Inc (WPC) and Conagra Brands Inc (CAG).
The top 10 holdings account for about 9.01% of total assets under management.
Performance and Risk
So far this year, DON has added about 0.46%, and is up about 8.21% in the last one year (as of 02/26/2024). During this past 52-week period, the fund has traded between $38.70 and $46.
The ETF has a beta of 1.07 and standard deviation of 18.88% for the trailing three-year period, making it a medium risk choice in the space. With about 336 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. MidCap Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell Mid-Cap Value ETF (IWS) tracks Russell MidCap Value Index and the Vanguard Mid-Cap Value ETF (VOE) tracks CRSP U.S. Mid Cap Value Index. IShares Russell Mid-Cap Value ETF has $13.27 billion in assets, Vanguard Mid-Cap Value ETF has $16.46 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
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 - Mid 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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Get it free >>WisdomTree U.S. MidCap Dividend ETF (DON): ETF Research Reports
Franklin Resources, Inc. (BEN) : Free Stock Analysis Report
Conagra Brands (CAG) : Free Stock Analysis Report
W.P. Carey Inc. (WPC) : Free Stock Analysis Report
Vanguard Mid-Cap Value ETF (VOE): ETF Research Reports
iShares Russell Mid-Cap Value ETF (IWS): ETF Research Reports
