Looking for broad exposure to the Large Cap Value segment of the US equity market? You should consider the WisdomTree U.S. Total Dividend ETF (DTD), a passively managed exchange traded fund launched on 06/16/2006.
The fund is sponsored by Wisdomtree. It has amassed assets over $992.59 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.28%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.14%.
Sector Exposure and Top Holdings
ETFs offer a 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.
This ETF has heaviest allocation to the Information Technology sector–about 20.60% of the portfolio. Financials and Healthcare round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 5.72% of total assets, followed by Apple Inc (AAPL) and Johnson & Johnson (JNJ).
The top 10 holdings account for about 26.34% of total assets under management.
Performance and Risk
DTD seeks to match the performance of the WisdomTree U.S. Dividend Index before fees and expenses. The WisdomTree U.S. Dividend Index is a fundamentally-weighted index that defines the dividend-paying portion of the U.S. equity market.
The ETF has added about 23.19% so far this year and is up about 27.87% in the last one year (as of 11/12/2021). In the past 52-week period, it has traded between $100.45 and $125.73.
The ETF has a beta of 0.98 and standard deviation of 22.31% for the trailing three-year period, making it a medium risk choice in the space. With about 661 holdings, it effectively diversifies company-specific risk.
WisdomTree U.S. Total Dividend ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, DTD is a good option for those seeking exposure to the Style Box – Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $57.70 billion in assets, Vanguard Value ETF has $88.55 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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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