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.