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 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Wisdomtree. DTH has been able to amass assets over $278.89 M, making it one of the average sized ETFs in the Broad Developed World ETFs. This particular fund seeks to match the performance of the WisdomTree International High Dividend Index before fees and expenses.
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
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 DTH are 0.58%, which makes it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 4.40%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Novartis Ag (NOVN) accounts for about 2.57% of the fund's total assets, followed by China Mobile Ltd and Nestle Sa (NESN).
Its top 10 holdings account for approximately 20.9% of DTH's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree International High Dividend Fund has lost about -8.36% so far, and is down about -5.64% over the last 12 months (as of 11/14/2018). DTH has traded between $38.42 and $47.36 in this past 52-week period.
The ETF has a beta of 0.86 and standard deviation of 14.62% for the trailing three-year period, making it a medium risk choice in the space. With about 482 holdings, it effectively diversifies company-specific risk.
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 $55.02 B in assets, iShares MSCI EAFE ETF has $64.42 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.
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.
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
WISTR-INT HI (DTH): ETF Research Reports
EMG MKT FREE AS (EFA): ETF Research Reports
Novan Inc. (NOVN) : Free Stock Analysis Report
ISHARS-CR MS EA (IEFA): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research