Is WisdomTree U.S. Quality Dividend Growth ETF (DGRW) a Strong ETF Right Now?
Launched on 05/22/2013, the WisdomTree U.S. Quality Dividend Growth ETF (DGRW) 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?
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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
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
Managed by Wisdomtree, DGRW has amassed assets over $14.28 billion, making it one of the larger ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the WisdomTree U.S. Quality Dividend Growth Index.
The WisdomTree U.S. Quality Dividend Growth Index is a fundamentally weighted index that consists of dividend-paying stocks with growth characteristics.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for DGRW are 0.28%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.53%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
DGRW's heaviest allocation is in the Information Technology sector, which is about 29% of the portfolio. Its Healthcare and Industrials round out the top three.
Taking into account individual holdings, Microsoft Corp (MSFT) accounts for about 7.18% of the fund's total assets, followed by Apple Inc (AAPL) and Abbvie Inc (ABBV).
The top 10 holdings account for about 36.58% of total assets under management.
Performance and Risk
So far this year, DGRW has added roughly 17.67%, and it's up approximately 24.07% in the last one year (as of 09/03/2024). During this past 52-week period, the fund has traded between $61.43 and $81.96.
The fund has a beta of 0.86 and standard deviation of 14.30% for the trailing three-year period, which makes DGRW a medium risk choice in this particular space. With about 301 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. Quality Dividend Growth ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Core Dividend Growth ETF (DGRO) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $29.94 billion in assets, Vanguard Dividend Appreciation ETF has $84.47 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.
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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Get it free >>WisdomTree U.S. Quality Dividend Growth ETF (DGRW): ETF Research Reports
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
AbbVie Inc. (ABBV) : Free Stock Analysis Report
Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports
iShares Core Dividend Growth ETF (DGRO): ETF Research Reports
