Is WisdomTree U.S. Quality Dividend Growth ETF (DGRW) a Strong ETF Right Now?
Smart Beta ETF report for DGRW
Making its debut on 05/22/2013, smart beta exchange traded fund WisdomTree U.S. Quality Dividend Growth ETF (DGRW) provides investors broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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
The fund is managed by Wisdomtree. DGRW has been able to amass assets over $7.14 billion, making it one of the larger ETFs in the Style Box - Large Cap Value. DGRW seeks to match the performance of the WisdomTree U.S. Quality Dividend Growth Index before fees and expenses.
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
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 0.28% for DGRW, making it on par with most peer products in the space.
DGRW's 12-month trailing dividend yield is 1.77%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For DGRW, it has heaviest allocation in the Information Technology sector --about 27.50% of the portfolio --while Healthcare and Consumer Staples round out the top three.
Taking into account individual holdings, Microsoft Corp (MSFT) accounts for about 5.85% of the fund's total assets, followed by Apple Inc (AAPL) and Johnson & Johnson (JNJ).
DGRW's top 10 holdings account for about 36.21% of its total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. Quality Dividend Growth ETF return is roughly 0.50% so far, and was up about 26.74% over the last 12 months (as of 01/05/2022). DGRW has traded between $53.02 and $66.20 in this past 52-week period.
The fund has a beta of 0.94 and standard deviation of 20.97% for the trailing three-year period, which makes DGRW a medium risk choice in this particular space. With about 298 holdings, it effectively diversifies company-specific risk.
WisdomTree U.S. Quality Dividend Growth 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 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 $23.19 billion in assets, Vanguard Dividend Appreciation ETF has $68.71 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.
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. Quality Dividend Growth ETF (DGRW): ETF Research Reports
Apple Inc. (AAPL): Free Stock Analysis Report
Microsoft Corporation (MSFT): Free Stock Analysis Report
Johnson & Johnson (JNJ): Free Stock Analysis Report
Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports
iShares Core Dividend Growth ETF (DGRO): ETF Research Reports
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