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Is WisdomTree Global exU.S. Quality Dividend Growth ETF (DNL) a Strong ETF Right Now?

Smart Beta ETF report for DNL

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This story originally appeared on Zacks

Designed to provide broad exposure to the World ETFs category of the market, the WisdomTree Global exU.S. Quality Dividend Growth ETF (DNL) is a smart beta exchange traded fund launched on 06/16/2006.

- Zacks

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.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

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

The fund is managed by Wisdomtree. DNL has been able to amass assets over $451.05 million, making it one of the larger ETFs in the World ETFs. DNL seeks to match the performance of the WisdomTree Global ex-U.S. Quality Dividend Growth Index before fees and expenses.

The WisdomTree Global ex-U.S. Quality Dividend Growth Index is a fundamentally weighted index that measures the performance of dividend paying stocks with growth characteristics in the developed and emerging markets outside of the United States.

Cost & Other Expenses

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

Operating expenses on an annual basis are 0.58% for this ETF, which makes it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.74%.

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.

Looking at individual holdings, Rio Tinto Ltd (RIO) accounts for about 4.59% of total assets, followed by Taiwan Semiconductor Manufacturing Co Ltd and Unilever Plc (ULVR).

Its top 10 holdings account for approximately 36.72% of DNL's total assets under management.

Performance and Risk

The ETF has added about 14.87% and was up about 30.85% so far this year and in the past one year (as of 09/15/2021), respectively. DNL has traded between $32.44 and $43.87 during this last 52-week period.

The fund has a beta of 0.81 and standard deviation of 22.24% for the trailing three-year period, which makes DNL a medium risk choice in this particular space. With about 276 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree Global exU.S. Quality Dividend Growth ETF is a reasonable option for investors seeking to outperform the World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

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 $20.37 billion in assets, Vanguard Dividend Appreciation ETF has $61.99 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 World ETFs.

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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WisdomTree Global exU.S. Quality Dividend Growth ETF (DNL): ETF Research Reports

 

Rio Tinto PLC (RIO): Get Free Report

 

Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports

 

iShares Core Dividend Growth ETF (DGRO): ETF Research Reports

 

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