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Should WisdomTree U.S. LargeCap ETF (EPS) Be on Your Investing Radar?

·4 min read

If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the WisdomTree U.S. LargeCap ETF (EPS), a passively managed exchange traded fund launched on 02/23/2007.

The fund is sponsored by Wisdomtree. It has amassed assets over $353.11 million, 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

Large cap companies 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.

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. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.

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 0.08%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 2.25%.

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.

This ETF has heaviest allocation to the Information Technology sector--about 21.30% of the portfolio. Financials and Healthcare round out the top three.

Looking at individual holdings, Apple Inc (AAPL) accounts for about 4.81% of total assets, followed by Microsoft Corp (MSFT) and Alphabet Inc-Cl A (GOOGL).

The top 10 holdings account for about 24.65% 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 -17.25% so far this year and is down about -6.23% in the last one year (as of 04/23/2020). In the past 52-week period, it has traded between $24.35 and $37.92.

The ETF has a beta of 1.07 and standard deviation of 21.58% for the trailing three-year period, making it a medium risk choice in the space. With about 497 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree U.S. LargeCap ETF 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 $32.90 billion in assets, Vanguard Value ETF has $45.92 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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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WisdomTree U.S. LargeCap ETF (EPS): ETF Research Reports
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
 
Vanguard Value ETF (VTV): ETF Research Reports
 
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
 
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Zacks Investment Research