A smart beta exchange traded fund, the WisdomTree International High Dividend ETF (DTH) debuted on 06/16/2006, and offers broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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 $203.28 M, making it one of the average sized ETFs in the Broad Developed World ETFs. Before fees and expenses, DTH seeks to match the performance of the WisdomTree International High Dividend Index.
The WisdomTree International High Dividend Index is a fundamentally weighted Index that measures the performance of companies with high dividend yields selected from the WisdomTree International Equity Index.
Cost & Other Expenses
When considering an ETF’s total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.58%.
The fund has a 12-month trailing dividend yield of 4.77%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, China Mobile Ltd accounts for about 2.40% of the fund’s total assets, followed by Bp Plc (BP/) and British American Tobacco Plc (LON:BATS).
DTH’s top 10 holdings account for about 17.92% of its total assets under management.
Performance and Risk
Year-to-date, the WisdomTree International High Dividend ETF has lost about -10.34% so far, and is down about -1.96% over the last 12 months (as of 03/05/2020). DTH has traded between $36.56 and $42.34 in this past 52-week period.
The fund has a beta of 0.83 and standard deviation of 12.05% for the trailing three-year period, which makes DTH a medium risk choice in this particular space. With about 478 holdings, it effectively diversifies company-specific risk.
WisdomTree International High Dividend ETF is not a suitable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares MSCI EAFE ETF (EFA) tracks MSCI EAFE Index and the iShares Core MSCI EAFE ETF (IEFA) tracks MSCI EAFE Investable Market Index. IShares MSCI EAFE ETF has $59.78 B in assets, iShares Core MSCI EAFE ETF has $71.61 B. EFA has an expense ratio of 0.32% and IEFA charges 0.07%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed World ETFs.
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.