Designed to provide broad exposure to the Mid Cap Value segment of the US equity market, the WisdomTree U.S. MidCap Dividend ETF (DON) is a passively managed exchange traded fund launched on 06/16/2006.
The fund is sponsored by Wisdomtree. It has amassed assets over $3.14 billion, making it one of the larger ETFs attempting to match the Mid Cap Value segment of the US equity market.
Why Mid Cap Value
With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. These types of companies, then, have a good balance of stability and growth potential.
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. 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.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.38%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.33%.
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 Financials sector--about 22.80% of the portfolio. Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Evergy Inc (EVRG) accounts for about 1.28% of total assets, followed by Fidelity National Financial Inc (FNF) and Omnicom Group Inc (OMC).
The top 10 holdings account for about 10.84% of total assets under management.
Performance and Risk
DON seeks to match the performance of the WisdomTree U.S. MidCap Dividend Index before fees and expenses. The WisdomTree U.S. MidCap Dividend Index is a fundamentally weighted index that measures the performance of the mid-capitalization segment of the US dividend-paying market.
The ETF has lost about -3.56% so far this year and is up roughly 3.13% in the last one year (as of 05/04/2022). In the past 52-week period, it has traded between $40.05 and $45.36.
The ETF has a beta of 1.07 and standard deviation of 28.23% for the trailing three-year period, making it a medium risk choice in the space. With about 343 holdings, it effectively diversifies company-specific risk.
WisdomTree U.S. MidCap Dividend 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, DON is a reasonable option for those seeking exposure to the Style Box - Mid Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell MidCap Value ETF (IWS) and the Vanguard MidCap Value ETF (VOE) track a similar index. While iShares Russell MidCap Value ETF has $13.81 billion in assets, Vanguard MidCap Value ETF has $16.31 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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. MidCap Dividend ETF (DON): ETF Research Reports
Omnicom Group Inc. (OMC) : Free Stock Analysis Report
Fidelity National Financial, Inc. (FNF) : Free Stock Analysis Report
Vanguard MidCap Value ETF (VOE): ETF Research Reports
iShares Russell MidCap Value ETF (IWS): ETF Research Reports
Evergy Inc. (EVRG) : Free Stock Analysis Report
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