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Is the WisdomTree US Quality Dividend Growth ETF (DGRW) a strong ETF right now?

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Debuting on 5/22/2013, the Smart Beta exchange-traded fund WisdomTree US Quality Dividend Growth ETF (DGRW) offers investors broad exposure to the style box – large cap value category of the market.

What are Smart Beta ETFs?

For a long time, the ETF industry has been awash with products based on market-cap-weighted indices designed to represent the broad market or a particular market segment.

Because market capitalization indices provide a cheap, easy, and transparent way to replicate market returns, they work well for investors who believe in market efficiency.

But there are some investors who prefer to invest in Smart Beta Funds; These funds follow non-cap weighted strategies and are a strong option for those who like to pick great stocks to beat the market.

Non-cap weighted indices are based on certain fundamental characteristics, or a combination of them, by attempting to select stocks with the best potential for risk-return performance.

Methodologies such as equal weighting, one of the simplest options, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund sponsor and index

The fund is managed by WisdomTree. DGRW has been able to amass over $7.58 billion in assets, making it one of the larger ETFs in the Style Box – Large Cap Value. DGRW aims to match, before fees and expenses, the performance of the WisdomTree US Quality Dividend Growth Index.

The WisdomTree US Quality Dividend Growth Index is a fundamentally weighted index composed of dividend-paying stocks with growth characteristics.

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costs and other expenses

Since cheaper funds generally outperform more expensive funds, it’s important for investors to pay attention to ETF expense ratios, assuming all other factors remain the same.

The annual operating cost for DGRW is 0.28%, making it comparable to most comparable products in the space.

This rolling dividend yield over 12 months is 2.04%.

Sector exposure and top positions

ETFs provide diversified exposure and thus reduce risk associated with individual stocks, but it’s still important to research the fund’s holdings before investing. Most ETFs are highly transparent products and many disclose their holdings daily.

As for DGRW, it has the largest allocation to the information technology sector – about 21% of the portfolio – while consumer staples and healthcare round out the top three.

Looking at individual holdings, Apple Inc (AAPL) accounts for approximately 5.25% of the fund’s total assets, followed by Johnson & Johnson (JNJ) and Microsoft Corp (MSFT).

DGRW’s top 10 holdings account for approximately 34.19% of total assets under management.

performance and risk

So far this year, DGRW has lost about -3.58% and was up about 0.23% last year (as of 11/24/2022). Over the past 52 weeks, the fund has traded between $53.91 and $66.20.

For the next three-year period, DGRW has a beta of 0.89 and a standard deviation of 22.50%, making the fund a moderate risk option in the space. With approximately 297 participations, the company-specific risk is effectively spread.

Alternative

The WisdomTree US Quality Dividend Growth ETF is a reasonable choice for investors looking to outperform the style box – large cap value segment of the market. However, there are other ETFs in this sector for investors to consider.

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The iShares Core Dividend Growth ETF (DGRO) tracks the Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG) tracks the NASDAQ US Dividend Achievers Select Index. The iShares Core Dividend Growth ETF has $24.76 billion in assets, the Vanguard Dividend Appreciation ETF has $66.36 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.

Investors seeking low-cost, low-risk options should consider traditional market-cap-weighted ETFs that aim to match the returns of Style Box – Large Cap Value.

ground floor

To learn more about this product and other ETFs, view the products that fit your investment goals, and read articles about the latest developments in the ETF investment universe, visit the Zacks ETF Center.

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WisdomTree US Quality Dividend Growth ETF (DGRW): ETF Research Report

Apple Inc. (AAPL): Free stock analysis report

Microsoft Corporation (MSFT): Free Stock Analysis Report

Johnson & Johnson (JNJ): Free Inventory Analysis Report

Vanguard Dividend Appreciation ETF (VIG): ETF Research Report

iShares Core Dividend Growth ETF (DGRO): ETF Research Report

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Jax Investment Research

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