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Is WisdomTree International High Dividend Fund (DTH) a Hot ETF Right Now?

Zacks Equity Research
Mutual Fund Report for PGOFX

Making its debut on 06/16/2006, smart beta exchange traded fund WisdomTree International High Dividend Fund (DTH) provides investors broad exposure to the Broad Developed World ETFs category of the U.S. equity 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.

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.

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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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

Managed by Wisdomtree, DTH has amassed assets over $321.76 M, making it one of the average sized ETFs in the Broad Developed World ETFs. Before fees and expenses, DTH seeks to match the performance of the WisdomTree International High Dividend Index.

The WisdomTree International High Dividend Index is a fundamentally weighted Index that measures the performance of companies with high dividend yields selected from the WisdomTree International Equity Index.

Cost & Other Expenses

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

Annual operating expenses for DTH are 0.58%, which makes it on par with most peer products in the space.

DTH's 12-month trailing dividend yield is 3.77%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Taking into account individual holdings, Royal Dutch Shell Plc Class A (RDSA) accounts for about 3.42% of the fund's total assets, followed by Bp Plc (BP/) and Total Sa (FP).

Its top 10 holdings account for approximately 22.7% of DTH's total assets under management.

Performance and Risk

The fund's year-to-date return has lost about -4.78%, and is up about 3.63% in the last one year (as of 06/22/2018). DTH has traded between $41.56 and $47.36 in the past 52-week period.

DTH has a beta of 0.93 and standard deviation of 15.66% for the trailing three-year period, which makes the fund a medium choice in the space. With about 450 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree International High Dividend Fund is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Core MSCI EAFE ETF (IEFA) tracks MSCI EAFE Investable Market Index and the iShares MSCI EAFE ETF (EFA) tracks MSCI EAFE Index. IShares Core MSCI EAFE ETF has $55.82 B in assets, iShares MSCI EAFE ETF has $74.07 B. IEFA has an expense ratio of 0.08% and EFA charges 0.32%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed World ETFs.

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.


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