Should WisdomTree U.S. LargeCap Dividend ETF (DLN) Be On Your Investing Radar?

Looking for broad exposure to the Large Cap Value segment of the US equity market? You should consider the WisdomTree U.S. LargeCap Dividend ETF DLN, a passively managed exchange traded fund launched on 06/16/2006.

The fund is sponsored by Wisdomtree. It has amassed assets over $3.66 billion, 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 usually 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.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.28%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.47%.

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.

This ETF has heaviest allocation to the Information Technology sector--about 18.70% of the portfolio. Healthcare and Financials round out the top three.

Looking at individual holdings, Exxon Mobil Corp XOM accounts for about 4.03% of total assets, followed by Apple Inc AAPL and Microsoft Corp MSFT.

The top 10 holdings account for about 26.1% of total assets under management.

Performance And Risk

DLN seeks to match the performance of the WisdomTree U.S. LargeCap Dividend Index before fees and expenses. The WisdomTree U.S. LargeCap Dividend Index is a fundamentally weighted index that measures the performance of the large-capitalization segment of the U.S. dividend-paying market.

The ETF has gained about 6.57% so far this year and is up about 10.81% in the last one year (as of 07/24/2023). In the past 52-week period, it has traded between $55.26 and $65.27.

The ETF has a beta of 0.89 and standard deviation of 14.84% for the trailing three-year period, making it a medium risk choice in the space. With about 301 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree U.S. LargeCap 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, DLN 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 $52.06 billion in assets, Vanguard Value ETF has $102.54 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.

Bottom-Line

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.