Launched on 06/16/2006, the WisdomTree U.S. SmallCap Dividend ETF (DES) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Value category of the market.
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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
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
The fund is managed by Wisdomtree, and has been able to amass over $2.03 billion, which makes 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 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 2.53%.
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.
This ETF has heaviest allocation in the Financials sector - about 24.3% of the portfolio. Consumer Discretionary and Industrials round out the top three.
When you look at individual holdings, Epr Properties (EPR) accounts for about 1.07% of the fund's total assets, followed by Tfs Financial Corp (TFSL) and Cal-maine Foods Inc (CALM).
DES's top 10 holdings account for about 8.98% of its total assets under management.
Performance and Risk
The ETF return is roughly 12.16% so far this year and is up about 13.98% in the last one year (as of 02/27/2026). In the past 52-week period, it has traded between $28.02 and $37.69
DES has a beta of 0.96 and standard deviation of 19.49% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 537 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 $13.18 billion in assets, Vanguard Small-Cap Value ETF has $34.7 billion. IWN has an expense ratio of 0.24% and VBR changes 0.05%.
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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