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Launched on 06/16/2006, the WisdomTree U.S. LargeCap Dividend ETF (DLN) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
DLN is managed by Wisdomtree, and this fund has amassed over $3.37 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, DLN seeks to match the performance of the WisdomTree U.S. LargeCap Dividend Index.
The WisdomTree U.S. LargeCap Dividend Index is a fundamentally weighted index that measures the performance of the large-capitalization segment of the U.S. dividend-paying market.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.28% for DLN, making it on par with most peer products in the space.
DLN's 12-month trailing dividend yield is 2.22%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector - about 17.60% of the portfolio. Consumer Staples and Information Technology round out the top three.
Taking into account individual holdings, Microsoft Corp (MSFT) accounts for about 4.42% of the fund's total assets, followed by Apple Inc (AAPL) and Exxon Mobil Corp (XOM).