Is WisdomTree Europe SmallCap Dividend ETF (DFE) a Strong ETF Right Now?
Smart Beta ETF report for DFE
The WisdomTree Europe SmallCap Dividend ETF (DFE) made its debut on 06/16/2006, and is a smart beta exchange traded fund that provides broad exposure to the European Equity ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
DFE is managed by Wisdomtree, and this fund has amassed over $338.67 million, which makes it one of the average sized ETFs in the European Equity ETFs. This particular fund, before fees and expenses, seeks to match the performance of the WisdomTree Europe SmallCap Dividend Index.
WisdomTree Europe SmallCap Dividend Index is a fundamentally weighted index that measures the performance of the small-capitalization segment of the European dividend-paying market. The Index is comprised of the companies that compose the bottom 25% of the market capitalization of the WisdomTree Europe Dividend Index after the 300 largest companies have been removed .
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.58%.
DFE's 12-month trailing dividend yield is 2.68%.
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.
When you look at individual holdings, Ferrexpo Plc (FXPO) accounts for about 2.87% of the fund's total assets, followed by Jupiter Fund Management Plc (JUP) and Tgs Nopec Geophysical Co Asa (TGS).
DFE's top 10 holdings account for about 19.33% of its total assets under management.
Performance and Risk
So far this year, DFE has added about 18.34%, and it's up approximately 42.03% in the last one year (as of 10/20/2021). During this past 52-week period, the fund has traded between $50.23 and $79.11.
DFE has a beta of 1.18 and standard deviation of 23.21% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 160 holdings, it effectively diversifies company-specific risk.
WisdomTree Europe SmallCap Dividend ETF is a reasonable option for investors seeking to outperform the European Equity ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
JPMorgan BetaBuilders Europe ETF (BBEU) tracks MORNINGSTAR DEV EUROPE TARGET MKT EXP ID and the Vanguard FTSE Europe ETF (VGK) tracks FTSE Developed Europe All Cap Index. JPMorgan BetaBuilders Europe ETF has $8.98 billion in assets, Vanguard FTSE Europe ETF has $21.25 billion. BBEU has an expense ratio of 0.09% and VGK charges 0.08%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the European Equity ETFs.
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 Europe SmallCap Dividend ETF (DFE): ETF Research Reports
Transportadora De Gas Sa Ord B (TGS): Free Stock Analysis Report
Vanguard FTSE Europe ETF (VGK): ETF Research Reports
JPMorgan BetaBuilders Europe ETF (BBEU): ETF Research Reports
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