Designed to provide broad exposure to the Style Box - Mid Cap Value category of the market, the WisdomTree U.S. MidCap Dividend ETF (DON) is a smart beta exchange traded fund launched on 06/16/2006.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option 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.
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
DON is managed by Wisdomtree, and this fund has amassed over $3.63 billion, which makes it one of the larger ETFs in the Style Box - Mid Cap Value. Before fees and expenses, DON 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
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 0.38% for this ETF, which makes it on par with most peer products in the space.
DON's 12-month trailing dividend yield is 2.43%.
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.
DON's heaviest allocation is in the Financials sector, which is about 24.50% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Westar Energy Inc (WR) accounts for about 1.58% of the fund's total assets, followed by Gaming & Leisure Porperties Inc (GLPI) and Cna Financial Corp (CNA).
The top 10 holdings account for about 11.41% of total assets under management.
Performance and Risk
The ETF has lost about -2.24% and is up roughly 4.50% so far this year and in the past one year (as of 05/15/2025), respectively. DON has traded between $43.28 and $55.55 during this last 52-week period.
The ETF has a beta of 0.93 and standard deviation of 18.82% for the trailing three-year period, making it a medium risk choice in the space. With about 333 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 $13.13 billion in assets, Vanguard Mid-Cap Value ETF has $17.43 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
CNA Financial Corporation (CNA) : Free Stock Analysis Report
Gaming and Leisure Properties, Inc. (GLPI) : Free Stock Analysis Report
Vanguard Mid-Cap Value ETF (VOE): ETF Research Reports
iShares Russell Mid-Cap Value ETF (IWS): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
