A dividend ETF that invests in U.S. small-caps provides a way to capture the historical outperformance of value stocks, according to investment researcher Morningstar.
Since its inception in 2006 WisdomTree SmallCap Dividend (NYSEArca: DES) has behaved like a deeper value fund than nearly all of its peers, says Morningstar analyst Alex Bryan.
“The fund’s performance revealed its true colors. Just a few factors can explain most of the returns on a broad stock portfolio, including the portfolio’s sensitivity to the market, value, momentum, and small-cap premiums,” he wrote in a commentary. “These are well-documented sources of return. Value stocks tend to outperform growth stocks, small caps tend to do better than large caps, and stocks with high momentum continue to outpace their low-momentum counterparts.”
DES is up about 27% for the trailing 12 months.
Although the ETF doesn’t specifically target value stocks, it has shown a high sensitivity to the so-called value premium, Bryan notes.
The ETF charges an expense ratio of 0.38%.
WisdomTree SmallCap Dividend
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.