A smart beta exchange traded fund, the WisdomTree U.S. SmallCap Dividend ETF (DES) debuted on 06/16/2006, and offers broad exposure to the Style Box - Small 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.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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
DES is managed by Wisdomtree, and this fund has amassed over $1.85 billion, which makes it one of the larger ETFs in the Style Box - Small Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the WisdomTree U.S. SmallCap Dividend Index.
The WisdomTree U.S. SmallCap Dividend Index is a fundamentally weighted index measuring the performance of the small-capitalization segment of the US dividend-paying market.
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.
Annual operating expenses for this ETF are 0.38%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.86%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Us Dollaraccounts for about 100% of the fund's total assets, followed by Epr Properties (EPR) and Sabra Health Care Reit Inc (SBRA).
DES's top 10 holdings account for about 108.85% of its total assets under management.
Performance and Risk
So far this year, DES has lost about -2.94%, and is up about 2.52% in the last one year (as of 08/18/2025). During this past 52-week period, the fund has traded between $28.02 and $37.69.
DES has a beta of 0.99 and standard deviation of 20.39% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 576 holdings, it effectively diversifies company-specific risk .
Alternatives
WisdomTree U.S. SmallCap Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
iShares Russell 2000 Value ETF (IWN) tracks Russell 2000 Value Index and the Vanguard Small-Cap Value ETF (VBR) tracks CRSP U.S. Small Cap Value Index. iShares Russell 2000 Value ETF has $11.26 billion in assets, Vanguard Small-Cap Value ETF has $30.56 billion. IWN has an expense ratio of 0.24% and VBR changes 0.07%.
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 - Small 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. SmallCap Dividend ETF (DES): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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