Designed to provide broad exposure to the World ETFs category of the market, the WisdomTree Global exU.S. Quality Dividend Growth ETF (DNL) is a smart beta exchange traded fund launched on 06/16/2006.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by Wisdomtree, DNL has amassed assets over $288.48 million, making it one of the average sized ETFs in the World ETFs. Before fees and expenses, this particular fund seeks to match the performance of the WisdomTree Global ex-U.S. Quality Dividend Growth Index.
The WisdomTree Global ex-U.S. Quality Dividend Growth Index is a fundamentally weighted index that measures the performance of dividend paying stocks with growth characteristics in the developed and emerging markets outside of the United States.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.58%.
DNL's 12-month trailing dividend yield is 1.86%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Taking into account individual holdings, Novo Nordisk (NYSE:NVO) A/s (NOVOB) accounts for about 7.02% of the fund's total assets, followed by British American Tobacco (NYSE:BTI) Plc (BATS) and Fortescue Metals Group (OTC:FSUGY) Ltd (FMG).
Its top 10 holdings account for approximately 36.61% of DNL's total assets under management.
Performance and Risk
So far this year, DNL has added about 13.97%, and is up roughly 19.38% in the last one year (as of 12/09/2020). During this past 52-week period, the fund has traded between $46.16 and $73.97.
The fund has a beta of 0.84 and standard deviation of 22.28% for the trailing three-year period, which makes DNL a medium risk choice in this particular space. With about 245 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree Global exU.S. Quality Dividend Growth ETF is not a suitable option for investors seeking to outperform the World ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares Core Dividend Growth ETF (DGRO) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $14.18 billion in assets, Vanguard Dividend Appreciation ETF has $51.79 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the World 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 Global exU.S. Quality Dividend Growth ETF (DNL): ETF Research Reports
iShares Core Dividend Growth ETF (DGRO): ETF Research Reports
Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports
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