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?
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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
DNL is managed by Wisdomtree, and this fund has amassed over $376.68 million, which makes it one of the average sized ETFs in the World ETFs. DNL, before fees and expenses, 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.58% for DNL, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.76%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 has added about 4.58% and is up about 42.03% so far this year and in the past one year (as of 05/18/2021), respectively. DNL has traded between $58.82 and $82.38 during this last 52-week period.
The fund has a beta of 0.81 and standard deviation of 22.35% for the trailing three-year period, which makes DNL a medium risk choice in this particular 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 $18.83 billion in assets, Vanguard Dividend Appreciation ETF has $59.42 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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