DBES holds nearly 1,000, about 39% of which hail from the industrial and consumer discretionary sectors. Confirming its highly cyclical tilt, the ETF devotes over 22% of its combined weight to financial services and technology names.
“Investors that expect these stocks to outperform should take a conservative perspective regarding the magnitude of the expected excess return. While small-cap stocks can outperform, their strong performance over the course of the past 16 years probably isn’t representative of what to expect going forward,” according to Morningstar.
DBES is conservatively positioned at the geographic level and in the ETF’s just over two years on the market, its volatility traits compare favorably with those found on U.S. small-cap benchmarks.
For more on Smart Beta ETFs, visit the Smart Beta Channel home page.