The WisdomTree U.S. SmallCap Dividend ETF (DES) was launched on June 16, 2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Value segment of the US equity market.
The fund is sponsored by Wisdomtree. It has amassed assets over $1.90 billion, making it one of the larger ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.38%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.67%.
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.
This ETF has heaviest allocation to the Energy sector -- about -999900% of the portfolio. Industrials and Materials round out the top three.
Looking at individual holdings, Us Dollar accounts for about 71.36% of total assets, followed by Dreyfus Trsy Oblig Cash Mgmt Cl Ins and Sabra Health Care Reit Inc (SBRA).
The top 10 holdings account for about 108.02% of total assets under management.
Performance and Risk
DES seeks to match the performance of the WisdomTree U.S. SmallCap Dividend Index before fees and expenses. 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.
The ETF has added about 0.89% so far this year and is up about 2.67% in the last one year (as of 09/01/2025). In the past 52-week period, it has traded between $28.02 and $37.69.
The ETF has a beta of 0.99 and standard deviation of 20.39% for the trailing three-year period, making it a medium risk choice in the space. With about 576 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap Dividend ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, DES is a sufficient option for those seeking exposure to the Style Box - Small Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 Value ETF (IWN) and the Vanguard Small-Cap Value ETF (VBR) track a similar index. While iShares Russell 2000 Value ETF has $11.74 billion in assets, Vanguard Small-Cap Value ETF has $31.35 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
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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