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Should WisdomTree U.S. Earnings 500 Fund (EPS) Be on Your Investing Radar?

Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the WisdomTree U.S. Earnings 500 Fund (EPS) is a passively managed exchange traded fund launched on 02/23/2007.

The fund is sponsored by Wisdomtree. It has amassed assets over $204.62 M, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.28%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.88%.

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.

This ETF has heaviest allocation to the Information Technology sector--about 20% of the portfolio. Financials and Healthcare round out the top three.

Looking at individual holdings, Apple Inc (AAPL) accounts for about 4.95% of total assets, followed by Microsoft Corp (MSFT) and Jpmorgan Chase & Co (JPM).

The top 10 holdings account for about 22.95% of total assets under management.

Performance and Risk

EPS seeks to match the performance of the WisdomTree U.S. Earnings 500 Index before fees and expenses. The WisdomTree U.S. Earnings 500 Index is a fundamentally weighted index that measures the performance of earnings-generating companies within the large-capitalization segment of the U.S. Stock Market.

The ETF has lost about -5.94% so far this year and is down about -5.92% in the last one year (as of 12/18/2018). In the past 52-week period, it has traded between $28.82 and $33.13.

The ETF has a beta of 1.02 and standard deviation of 12.48% for the trailing three-year period, making it a medium risk choice in the space. With about 494 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree U.S. Earnings 500 Fund carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, EPS is a reasonable option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $37.31 B in assets, Vanguard Value ETF has $41.29 B. IWD has an expense ratio of 0.20% and VTV charges 0.05%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

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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