Is WisdomTree Global ex-U.S. Quality Dividend Growth ETF a Strong ETF Right Now?

Launched on 06/16/2006, the WisdomTree Global ex-U.S. Quality Dividend Growth ETF DNL is a smart beta exchange traded fund offering broad exposure to the World ETFs category of the market.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is sponsored by Wisdomtree. It has amassed assets over $625.40 million, making it one of the larger ETFs in the World ETFs. DNL seeks to match the performance of the WisdomTree Global ex-U.S. Quality Dividend Growth Index before fees and expenses.

The WisdomTree Global ex-U.S. Quality Dividend Growth Index is a fundamentally weighted index that measures the performance of dividend paying stocks with growth characteristics in the developed and emerging markets outside of the United States.

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Annual operating expenses for this ETF are 0.42%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.72%.

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.

Looking at individual holdings, Taiwan Semiconductor Manufacturing Co Ltd TSM accounts for about 6.47% of total assets, followed by Novo Nordisk A/s-B NONOF and Roche Holding Ag ROG.

Performance and Risk

The ETF has added about 6.31% so far this year and was up about 13.30% in the last one year (as of 09/17/2024). In the past 52-week period, it has traded between $31.84 and $40.81.

DNL has a beta of 0.96 and standard deviation of 18.66% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 325 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree Global ex-U.S. Quality Dividend Growth ETF is a reasonable option for investors seeking to outperform the World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Core Dividend Growth ETF DGRO tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF VIG tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $29.95 billion in assets, Vanguard Dividend Appreciation ETF has $85.25 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the World ETFs.

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