Designed to provide broad exposure to the Broad Emerging Market ETFs category of the market, the WisdomTree Emerging Markets SmallCap Dividend ETF (DGS) is a smart beta exchange traded fund launched on 10/30/2007.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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
Because the fund has amassed over $1.63 billion, this makes it one of the larger ETFs in the Broad Emerging Market ETFs. DGS is managed by Wisdomtree. Before fees and expenses, this particular fund seeks to match the performance of the WisdomTree Emerging Markets SmallCap Dividend Index.
The WisdomTree Emerging Markets SmallCap Dividend Index is a fundamentally weighted index that measures the performance of primarily small cap stocks selected from the WisdomTree Emerging Markets Dividend Index. Companies included in the Index fall within the bottom 10% of total market capitalization of the WisdomTree Emerging Markets Dividend Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.58% for DGS, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.08%.
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.
Taking into account individual holdings, Old Mutual Ltd (OMU) accounts for about 0.82% of the fund's total assets, followed by Tisco Financial Group Pcl - Nvdr (TISCO-R) and Grupo Aeroportuario Del Centro (OMAB).
The top 10 holdings account for about 7.32% of total assets under management.
Performance and Risk
The ETF has added roughly 10.97% and is up roughly 6.42% so far this year and in the past one year (as of 06/19/2025), respectively. DGS has traded between $43.34 and $54.95 during this last 52-week period.
The ETF has a beta of 0.65 and standard deviation of 14.35% for the trailing three-year period, making it a medium risk choice in the space. With about 1112 holdings, it effectively diversifies company-specific risk .
Alternatives
WisdomTree Emerging Markets SmallCap Dividend ETF is not a suitable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Vanguard FTSE Emerging Markets ETF (VWO) tracks FTSE Emerging Markets All Cap China A Inclusion Index and the iShares Core MSCI Emerging Markets ETF (IEMG) tracks MSCI Emerging Markets Investable Market Index. Vanguard FTSE Emerging Markets ETF has $87.35 billion in assets, iShares Core MSCI Emerging Markets ETF has $89.57 billion. VWO has an expense ratio of 0.07% and IEMG changes 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market ETFs
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 Emerging Markets SmallCap Dividend ETF (DGS): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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