Is WisdomTree U.S. LargeCap ETF (EPS) a Strong ETF Right Now?
Launched on 02/23/2007, the WisdomTree U.S. LargeCap ETF (EPS) 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?
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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
Managed by Wisdomtree, EPS has amassed assets over $948.76 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. 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.08% for EPS, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.52%.
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 EPS, it has heaviest allocation in the Information Technology sector --about 26.60% of the portfolio --while Financials and Healthcare round out the top three.
Taking into account individual holdings, Microsoft Corp (MSFT) accounts for about 5.91% of the fund's total assets, followed by Apple Inc (AAPL) and Alphabet Inc-Cl A (GOOGL).
EPS's top 10 holdings account for about 35.33% of its total assets under management.
Performance and Risk
The ETF has added roughly 17.39% and it's up approximately 24.94% so far this year and in the past one year (as of 07/18/2024), respectively. EPS has traded between $43.69 and $58.94 during this last 52-week period.
The fund has a beta of 0.99 and standard deviation of 16.34% for the trailing three-year period, which makes EPS a medium risk choice in this particular space. With about 501 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 $58.61 billion in assets, Vanguard Value ETF has $121.04 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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Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
