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Making its debut on 06/16/2006, smart beta exchange traded fund WisdomTree U.S. High Dividend ETF (DHS) provides investors broad exposure to the Style Box - Large Cap Value 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.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

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.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

The fund is managed by Wisdomtree, and has been able to amass over $1.06 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the WisdomTree U.S. High Dividend Index.

The WisdomTree U.S. High Dividend Index is a fundamentally weighted index that measures the performance of companies with high dividend yields selected from the WisdomTree Dividend Index.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Operating expenses on an annual basis are 0.38% for this ETF, which makes it on par with most peer products in the space.

DHS's 12-month trailing dividend yield is 3.99%.

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.

DHS's heaviest allocation is in the Financials sector, which is about 24.70% of the portfolio. Its Energy and Utilities round out the top three.

When you look at individual holdings, Abbvie Inc (ABBV) accounts for about 5.73% of the fund's total assets, followed by Exxon Mobil Corp (XOM) and Chevron Corp (CVX).

Its top 10 holdings account for approximately 37.54% of DHS's total assets under management.

Performance and Risk

Year-to-date, the WisdomTree U.S. High Dividend ETF has added roughly 4.03% so far, and is up about 9.82% over the last 12 months (as of 06/11/2024). DHS has traded between $73.70 and $87.24 in this past 52-week period.

DHS has a beta of 0.80 and standard deviation of 14.66% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 381 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree U.S. High Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Russell 1000 Value ETF (IWD) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $55.28 billion in assets, Vanguard Value ETF has $115.86 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value.

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 U.S. High Dividend ETF (DHS): ETF Research Reports

Chevron Corporation (CVX) : Free Stock Analysis Report

Exxon Mobil Corporation (XOM) : Free Stock Analysis Report

AbbVie Inc. (ABBV) : Free Stock Analysis Report

Vanguard Value ETF (VTV): ETF Research Reports

iShares Russell 1000 Value ETF (IWD): ETF Research Reports

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.