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Is WisdomTree U.S. Dividend exFinancials ETF (DTN) a Strong ETF Right Now?

Smart Beta ETF report for DTN

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This story originally appeared on Zacks

Launched on 06/16/2006, the WisdomTree U.S. Dividend exFinancials ETF (DTN) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value category of the market.

- Zacks

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

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

Managed by Wisdomtree, DTN has amassed assets over $549.68 million, making it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, DTN seeks to match the performance of the WisdomTree U.S. Dividend ex-Financials Index.

The WisdomTree U.S. Dividend ex-Financials Index measures the performance of high dividend-yielding stocks outside the financial sector.

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 this ETF are 0.38%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.75%.

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.

For DTN, it has heaviest allocation in the Consumer Staples sector --about 14.90% of the portfolio --while Utilities and Information Technology round out the top three.

Taking into account individual holdings, Altria Group Inc (MO) accounts for about 3.62% of the fund's total assets, followed by Lumen Technologies Inc (LUMN) and Philip Morris International Inc (PM).

The top 10 holdings account for about 20.95% of total assets under management.

Performance and Risk

The ETF return is roughly 25.67% so far this year and it's up approximately 24.76% in the last one year (as of 12/31/2021). In the past 52-week period, it has traded between $82.63 and $101.12.

The ETF has a beta of 1.02 and standard deviation of 23.49% for the trailing three-year period, making it a medium risk choice in the space. With about 96 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree U.S. Dividend exFinancials 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 $60.05 billion in assets, Vanguard Value ETF has $92.19 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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WisdomTree U.S. Dividend exFinancials ETF (DTN): ETF Research Reports

 

Altria Group, Inc. (MO): Free Stock Analysis Report

 

Philip Morris International Inc. (PM): Free Stock Analysis Report

 

Vanguard Value ETF (VTV): ETF Research Reports

 

iShares Russell 1000 Value ETF (IWD): ETF Research Reports

 

Lumen Technologies, Inc. (LUMN): Free Stock Analysis Report

 

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