A smart beta exchange traded fund, the WisdomTree U.S. SmallCap ETF (EES) debuted on 02/23/2007, 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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Wisdomtree. It has amassed assets over $519.40 million, making it one of the average sized 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 Earnings Index.
The WisdomTree U.S. SmallCap Index is a fundamentally weighted index that measures the performance of earnings-generating companies within the small-capitalization segment of the U.S. Stock 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 EES are 0.38%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.63%.
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.
EES's heaviest allocation is in the Financials sector, which is about 27.60% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Brighthouse Financial Inc (BHF) accounts for about 0.91% of the fund's total assets, followed by Valaris Ltd (G9460G101) and Bgc Group Inc-A (BGC).
EES's top 10 holdings account for about 5.91% of its total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. SmallCap ETF has lost about -17.12% so far, and is down about -2.35% over the last 12 months (as of 04/17/2025). EES has traded between $42.54 and $58.78 in this past 52-week period.
The ETF has a beta of 1.12 and standard deviation of 22.84% for the trailing three-year period, making it a medium risk choice in the space. With about 918 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. SmallCap ETF is an excellent option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Avantis U.S. Small Cap Value ETF (AVUV) tracks ---------------------------------------- and the Vanguard Small-Cap Value ETF (VBR) tracks CRSP U.S. Small Cap Value Index. Avantis U.S. Small Cap Value ETF has $13.33 billion in assets, Vanguard Small-Cap Value ETF has $26.04 billion. AVUV has an expense ratio of 0.25% and VBR charges 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 ETF (EES): ETF Research Reports BGC Group, Inc. (BGC): Free Stock Analysis Report Vanguard Small-Cap Value ETF (VBR): ETF Research Reports Brighthouse Financial, Inc. (BHF): Free Stock Analysis Report Avantis U.S. Small Cap Value ETF (AVUV): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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