Designed to provide broad exposure to the Style Box - Small Cap Value category of the market, the WisdomTree U.S. SmallCap Dividend ETF (DES) is a smart beta exchange traded fund launched on 06/16/2006.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Because the fund has amassed over $2.1 billion, this makes it one of the average sized ETFs in the Style Box - Small Cap Value. DES is managed by Wisdomtree. DES, before fees and expenses, seeks to match the performance of the WisdomTree U.S. SmallCap Dividend Index.
The WisdomTree U.S. SmallCap Dividend Index is a fundamentally weighted index measuring the performance of the small-capitalization segment of the US dividend-paying market.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.38% for DES, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.29%.
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.
Representing 23.8% of the portfolio, the fund has heaviest allocation to the Financials sector; Consumer Discretionary and Industrials round out the top three.
Taking into account individual holdings, Tfs Financial Corp (TFSL) accounts for about 1.06% of the fund's total assets, followed by Sonoco Products Co (SON) and Kodiak Gas Services Inc (KGS).
DES's top 10 holdings account for about 9.38% of its total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. SmallCap Dividend ETF has added about 16.65% so far, and was up about 31.22% over the last 12 months (as of 05/07/2026). DES has traded between $30.65 $38.86 in this past 52-week period.
DES has a beta of 0.92 and standard deviation of 19.02% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 532 holdings, it effectively diversifies company-specific risk .
Alternatives
WisdomTree U.S. SmallCap Dividend ETF is an excellent option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
iShares Russell 2000 Value ETF (IWN) tracks Russell 2000 Value Index and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) tracks CRSP U.S. Small Cap Value Index. iShares Russell 2000 Value ETF has $13.8 billion in assets, Vanguard Small-Cap Value Index Fund ETF Shares has $35.38 billion. IWN has an expense ratio of 0.24% and VBR changes 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Value
Bottom Line
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WisdomTree U.S. SmallCap Dividend ETF (DES): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).