U.S. small-caps have impressed this year, a fact confirmed by the 31.3% year-to-date gain for the iShares Russell 2000 ETF (NYSEArca: IWM), the largest small-cap ETF by assets. The iShares Core S&P SmallCap 600 ETF (NYSEArca: IJR) has been even better with a 34.2% 2013 pop.
Small-cap ETFs with a global tilt have not been too shabby, either. The $747.8 million WisdomTree International SmallCap Dividend Fund (NYSEArca: DLS) has surged 23%, including paid dividends. And the dividend element is something to consider. DLS has a 30-day SEC yield of 2.99%, more than double the 1.23% found on IWM. [A Look at International Dividend ETFs]
Country allocations are also pivotal with DLS and a look at the ETF’s country exposures explains why the fund has been solid this year. While DLS offers exposure to 22 countries, the top three – Japan, Australia and the U.K. – combine for 56% of the ETF’s weight. With a weight of 15.8%, the U.K. is the third-largest country weight in DLS, but that is more than triple the weight given to Sweden, the fourth-largest country exposure.
The heavy exposure to Australia, Japan and the U.K. has proven beneficial for DLS shareholders because those have been three of the better performing ex-U.S. developed markets this year. [Evaluating Small-Cap ETF Indices]
Turning to the technical, DLS could be poised to deliver further upside.
“DLS has once again pulled back to and “undercut” the 20-day exponential moving average, where there is also support from the 38.2% Fibonacci retracement level, as well as the prior swing high of the last short-term consolidation,” said Deron Wagner of Morpheus Trading Group.