Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the WisdomTree U.S. LargeCap Dividend ETF (DLN) is a passively managed exchange traded fund launched on 06/16/2006.
The fund is sponsored by Wisdomtree. It has amassed assets over $3.99 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies usually have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.28%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.19%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 17.10% of the portfolio. Information Technology and Consumer Staples round out the top three.
Looking at individual holdings, Apple Inc (AAPL) accounts for about 3.90% of total assets, followed by Microsoft Corp (MSFT) and Jpmorgan Chase & Co (JPM).
The top 10 holdings account for about 28.2% of total assets under management.
Performance and Risk
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.
The ETF return is roughly 10.32% so far this year and is up about 15.31% in the last one year (as of 08/07/2024). In the past 52-week period, it has traded between $58.89 and $75.56.
The ETF has a beta of 0.87 and standard deviation of 13.87% for the trailing three-year period, making it a medium risk choice in the space. With about 307 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. LargeCap Dividend ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, DLN is a sufficient option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Value ETF (VTV) track a similar index. While Schwab U.S. Dividend Equity ETF has $56.59 billion in assets, Vanguard Value ETF has $117.71 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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. LargeCap Dividend ETF (DLN): ETF Research Reports
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
Schwab U.S. Dividend Equity ETF (SCHD): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
