Profit-taking pressures have begun to creep onto Wall Street as earnings euphoria has bolstered major equity indexes to all-time highs, prompting many to lock-in gains ahead of the next potential pullback. Amid the strong bull market, industry juggernaut WisdomTree is expanding its suite of offerings with a targeted fund that should appeal to investors who have been eagerly looking to participate in Wall Street’s rally. The new WisdomTree U.S. SmallCap Dividend Growth Fund will look to take advantage of the markets’ growing optimism as it targets arguably the most volatile corner of the domestic market: small cap stocks, with a twist .

Small Caps For Dividend Lovers

WisdomTree is making history with the launch of DGRS as it is the first small cap-focused ETF out on the market that targets growing dividend-paying securities. Exposure to this often overlooked corner of the U.S. market is appealing for several reasons; first and foremost, small cap stocks have historically outperformed their large-cap counterparts during bull markets. Second, with interest rates still hovering near record lows, investors are actively scouring the market for meaningful sources of current income.

Lastly, the sluggish global recovery should also bode well for this ETF as investors continue to rotate out of large caps with far-reaching international exposure, and into smaller cap companies, which should benefit from the improving domestic recovery .

Jeremy Schwartz, Director of Research at WisdomTree, noted that the issuers’ “family of dividend growth ETFs offer a unique, forward-looking dividend growth methodology. A number of dividend growth indexes focus on backward-looking dividend-screening criteria that we believe exclude many dividend initiators and fast-growers that are often found in the small-cap arena. DGRS is the first, and only, strategy focusing on the U.S. market’s small-cap dividend growth leaders, a segment we believe offers some of the most attractive dividend growth opportunities” .

The current lineup of dividend-growth funds from WisdomTree, excluding the new small cap ETF, includes:

  • U.S. Dividend Growth Fund with $35 million in assets under management
  • Global ex-U.S. Growth Fund with $64 million in assets under management

Meet The Competition

DGRS joins a fairly competitive space, the Small Cap Blend Equities ETFdb Category, which is currently made up of nearly two dozen offerings. The new WisdomTree ETF charges 0.38% in annual fees, which falls in the middle of the cost spectrum for the broader category, which features an average expense of 0.36%. DGRS will face some stiff competition from the three largest ETFs in this space, which are:

  • iShares Russell 2000 Index Fund with over $25.5 billion in AUM
  • iShares Core S&P Small-Cap ETF with over $11.6 billion in AUM
  • Vanguard Small-Cap ETF with over $7 billion in AUM

The new WisdomTree ETF should be able to separate itself from the pack because it focuses exclusively on small cap size, dividend-paying securities that exhibit growth characteristics.

Follow me on Twitter @SBojinov

Disclosure: No positions at time of writing.



Related Articles
  1. Investing

    Time to Bring Active Back into a Portfolio?

    While stocks have rallied since the economic recovery in 2009, many active portfolio managers have struggled to deliver investor returns in excess.
  2. Chart Advisor

    Now Could Be The Time To Buy IPOs

    There has been lots of hype around the IPO market lately. We'll take a look at whether now is the time to buy.
  3. Economics

    Long-Term Investing Impact of the Paris Attacks

    We share some insights on how the recent terrorist attacks in Paris could impact the economy and markets going forward.
  4. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  5. Mutual Funds & ETFs

    Buying Vanguard Mutual Funds Vs. ETFs

    Learn about the differences between Vanguard's mutual fund and ETF products, and discover which may be more appropriate for investors.
  6. Mutual Funds & ETFs

    ETFs Vs. Mutual Funds: Choosing For Your Retirement

    Learn about the difference between using mutual funds versus ETFs for retirement, including which investment strategies and goals are best served by each.
  7. Mutual Funds & ETFs

    How to Reinvest Dividends from ETFs

    Learn about reinvesting ETF dividends, including the benefits and drawbacks of dividend reinvestment plans (DRIPs) and manual reinvestment.
  8. Mutual Funds & ETFs

    Best 3 Vanguard Funds that Track the Top 500 Companies

    Discover the three Vanguard funds tracking the S&P 500 Index, and learn about the characteristics and historical statistics of these funds.
  9. Forex Fundamentals

    How to Buy Chinese Yuan

    Discover the different options that are available to investors who want to obtain exposure to the Chinese yuan, including ETFs and ETNs.
  10. Mutual Funds & ETFs

    ETF Fees: Why BlackRock is the Latest to Cut Them

    Low expense ratios are a big selling point for ETFs, but are they being focused on too much?
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>

You May Also Like

Trading Center