The WisdomTree Global exU.S. Quality Dividend Growth ETF (DNL) made its debut on 06/16/2006, and is a smart beta exchange traded fund that provides broad exposure to the World ETFs 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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix 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 $378.64 million, making it one of the average sized ETFs in the World ETFs. Before fees and expenses, DNL 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
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.
Annual operating expenses for this ETF are 0.58%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.75%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Taiwan Semiconductor Manufacturing Co Ltd accounts for about 4.85% of total assets, followed by Unilever (NYSE:UL) Plc (ULVR) and Rio Tinto Ltd (NYSE:RIO).
The top 10 holdings account for about 36.84% of total assets under management.
Performance and Risk
The ETF return is roughly 5.04% so far this year and is up about 48.61% in the last one year (as of 04/22/2021). In the past 52-week period, it has traded between $56.20 and $81.08.
DNL has a beta of 0.82 and standard deviation of 22.24% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 276 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 $18.33 billion in assets, Vanguard Dividend Appreciation ETF has $58.16 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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WISTR-GL XUS QD (DNL): ETF Research Reports
Rio Tinto PLC (RIO): Free Stock Analysis Report
ISHRS-CORE DG (DGRO): ETF Research Reports
VANGD-DIV APPRC (VIG): ETF Research Reports
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