The WisdomTree U.S. SmallCap Dividend ETF (DES) made its debut on 06/16/2006, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
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.
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
The fund is sponsored by Wisdomtree. It has amassed assets over $2.2 billion, making it one of the average sized ETFs in the Style Box - Small Cap Value. This particular fund, 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.
Annual operating expenses for DES are 0.38%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.27%.
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.
DES's heaviest allocation is in the Financials sector, which is about 25.4% of the portfolio. Its Consumer Discretionary and Industrials round out the top three.
When you look at individual holdings, Tfs Financial Corp (TFSL) accounts for about 1.15% of the fund's total assets, followed by Entertainment Properties Trust (EPR) and Kodiak Gas Services Inc (KGS).
Its top 10 holdings account for approximately 9.51% of DES's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree U.S. SmallCap Dividend ETF has added about 22.24% so far, and it's up approximately 20.21% over the last 12 months (as of 09/08/2026). DES has traded between $31.77 $41.73 in this past 52-week period.
The fund has a beta of 0.89 and standard deviation of 18.43% for the trailing three-year period, which makes DES a medium risk choice in this particular space. With about 517 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 Morningstar Small-Cap Value ETF (VBR) tracks CRSP U.S. Small Cap Value Index. iShares Russell 2000 Value ETF has $14.58 billion in assets, Vanguard Morningstar Small-Cap Value ETF has $37.54 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
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.Boost Your Portfolio with Our Top ETF Insights
Zacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.
Don’t miss out on this valuable resource. It’s free!
Get it now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
WisdomTree U.S. SmallCap Dividend ETF (DES): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).