Designed to provide broad exposure to the Small Cap Value segment of the US equity market, the WisdomTree U.S. SmallCap Fund (EES) is a passively managed exchange traded fund launched on 02/23/2007.
The fund is sponsored by Wisdomtree. It has amassed assets over $758.41 M, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their 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.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 1.67%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Consumer Discretionary sector--about 23.30% of the portfolio. Financials and Industrials round out the top three.
Looking at individual holdings, Lithia Motors Inc (LAD) accounts for about 0.97% of total assets, followed by Dana Inc (DAN) and Warrior Met Coal Inc (HCC).
The top 10 holdings account for about 8.04% of total assets under management.
Performance and Risk
EES seeks to match the performance of the WisdomTree U.S. SmallCap Earnings Index before fees and expenses. The WisdomTree U.S. SmallCap Earnings Index is a fundamentally weighted index that measures the performance of earnings-generating companies within the small-capitalization segment of the U.S. Stock Market.
The ETF return is roughly 8.61% so far this year and is down about -10.82% in the last one year (as of 06/12/2019). In the past 52-week period, it has traded between $30.28 and $40.77.
The ETF has a beta of 1.20 and standard deviation of 15.82% for the trailing three-year period, making it a medium risk choice in the space. With about 855 holdings, it effectively diversifies company-specific risk.
WisdomTree U.S. SmallCap Fund sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. EES, then, is not a great choice for investors seeking exposure to the Style Box - Small Cap Value segment of the market. Instead, there are better ETFs in the space to consider.
The iShares Russell 2000 Value ETF (IWN) and the Vanguard Small-Cap Value ETF (VBR) track a similar index. While iShares Russell 2000 Value ETF has $8.60 B in assets, Vanguard Small-Cap Value ETF has $13.11 B. IWN has an expense ratio of 0.24% and VBR charges 0.07%.
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. SmallCap Fund (EES): ETF Research Reports
Lithia Motors, Inc. (LAD) : Free Stock Analysis Report
Dana Incorporated (DAN) : Free Stock Analysis Report
Vanguard Small-Cap Value ETF (VBR): ETF Research Reports
iShares Russell 2000 Value ETF (IWN): ETF Research Reports
Warrior Met Coal Inc. (HCC) : Free Stock Analysis Report
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