Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the WisdomTree U.S. High Dividend ETF (DHS) is a smart beta exchange traded fund launched on 06/16/2006.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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
DHS is managed by Wisdomtree, and this fund has amassed over $1.16 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. DHS seeks to match the performance of the WisdomTree U.S. High Dividend Index before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
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 4.32%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector - about 22.30% of the portfolio. Financials and Utilities round out the top three.
Taking into account individual holdings, Exxon Mobil Corp (XOM) accounts for about 5.82% of the fund's total assets, followed by Abbvie Inc (ABBV) and Chevron Corp (CVX).