Looking for broad exposure to the Small Cap Value segment of the US equity market? You should consider the WisdomTree U.S. SmallCap ETF (EES), a passively managed exchange traded fund launched on 02/23/2007.
The fund is sponsored by Wisdomtree. It has amassed assets over $556.16 million, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.38%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.88%.
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 to the Financials sector--about 25.60% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Mr Cooper Group Inc (COOP) accounts for about 1% of total assets, followed by Boise Cascade Co (BCC) and Flagstar Bancorp Inc (FBC).
The top 10 holdings account for about 6.33% of total assets under management.
Performance and Risk
EES seeks to match the performance of the WisdomTree U.S. SmallCap Earnings Index before fees and expenses. The WisdomTree U.S. SmallCap Index is a fundamentally weighted index that measures the performance of earnings-generating companies within the small-capitalization segment of the U.S. Stock Market.
The ETF has lost about -19.60% so far this year and is down about -14.91% in the last one year (as of 07/04/2022). In the past 52-week period, it has traded between $40.36 and $53.68.
The ETF has a beta of 1.27 and standard deviation of 32.10% for the trailing three-year period, making it a medium risk choice in the space. With about 963 holdings, it effectively diversifies company-specific risk.