The WisdomTree International Equity ETF (DWM) made its debut on 06/16/2006, and is a smart beta exchange traded fund that provides broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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 managed by Wisdomtree, and has been able to amass over $617.84 million, which makes it one of the average sized ETFs in the Broad Developed World ETFs. This particular fund, before fees and expenses, seeks to match the performance of the WisdomTree International Equity Index.
The WisdomTree International Equity Index is a fundamentally weighted Index that measures the performance of dividend-paying companies in the industrialized world, excluding Canada and 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.
Operating expenses on an annual basis are 0.48% for DWM, making it on par with most peer products in the space.
DWM's 12-month trailing dividend yield is 3.47%.
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, Nestle Sa (NESN) accounts for about 2.34% of the fund's total assets, followed by Novartis Ag (NOVN) and Roche Holding (OTC:RHHBY) Ag (ROG).
DWM's top 10 holdings account for about 14.64% of its total assets under management.
Performance and Risk
So far this year, DWM has gained about 9.05%, and was up about 15.09% in the last one year (as of 11/19/2021). During this past 52-week period, the fund has traded between $48.61 and $56.66.
DWM has a beta of 0.80 and standard deviation of 20.36% for the trailing three-year period, which makes the fund a low risk choice in the space. With about 714 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree International Equity ETF is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
IShares MSCI EAFE ETF (EFA) tracks MSCI EAFE Index and the iShares Core MSCI EAFE ETF (IEFA) tracks MSCI EAFE Investable Market Index. IShares MSCI EAFE ETF has $58.44 billion in assets, iShares Core MSCI EAFE ETF has $104.81 billion. EFA has an expense ratio of 0.32% and IEFA charges 0.07%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed 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 International Equity ETF (DWM): ETF Research Reports
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iShares MSCI EAFE ETF (EFA): ETF Research Reports
iShares Core MSCI EAFE ETF (IEFA): ETF Research Reports
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