WisdomTree US SmallCap Qual Div Gr ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Gold. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy's investment process inspires confidence and earns a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in quality exposure and an underweight in liquidity exposure compared with category peers. High quality exposure is attributed to stocks with low financial leverage and strong returns on equity. And a low liquidity exposure is rooted in stocks with lower trading volumes, limiting managers' flexibility. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm a Below Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Marriott Vacations Worldwide

Cohen & Steers

Victory Capital Holdings

Viper Energy Partners LP

Kontoor Brands Inc

Carter's

Virtu Financial

Patterson Companies

Bloomin' Brands

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. WisdomTree US SmallCap Qual Div Gr Fd earns a High Process Pillar rating. 

The most significant contributor to the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Noteworthy risk-adjusted performance also strengthens the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. The parent firm's superior risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.4 stars, supports the rating as well.

 This strategy targets smaller plays than its peers’ average in the Small Value Morningstar Category. But in terms of style (value/growth) exposure, it does not have much of a bias and resembles the category's typical portfolio. Analyzing additional factors, this strategy has consistently had a defensive tilt owing to its exposure to high-quality stocks over the past few years. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets. In recent months, the strategy was more exposed to the Quality factor compared with its Morningstar Category peers as well. Given the low trading volume of holdings, this strategy also has higher liquidity risk exposure in these years, consistently over its peers. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. Similarly, in recent months, the strategy also had less exposure to the Liquidity factor than peers. Additionally, this strategy's portfolio has held more stocks with high dividend or buyback yields than peers over recent years. Stocks with high yields can be more stable, mature companies, but at times extreme market pressure or fundamental deterioration may prompt them to cut their dividends, which tends to hurt stock performance. In this month, the strategy also had more exposure to the Yield factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in consumer cyclical and industrials relative to the category average by 8.5 and 5.4 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and real estate, underweight the average by 6.4 and 4.7 percentage points of assets, respectively. The strategy owns 245 securities and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 16.9% of the portfolio's assets were concentrated in the top 10 fund holdings, as opposed to the category average's 28.1%. And finally, in terms of portfolio turnover, on a year-over-year basis, 51% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

High

Process

WisdomTree’s team is good but unexceptional, earning the strategy an Average People Pillar rating. There’s a sizable bench of five managers listed on the fund. Together, they manage a total of 113 strategies, with a Bronze asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Average

People

WisdomTree is improving, but its shaky global fund lineup and uncertain trajectory hold its rating to Below Average. 

WisdomTree’s research organization has long been a strength. Under CIO Jeremy Schwartz, the team has generated creative, economically sound ideas and evolved them into investable products, like the efficient core series. A recent focus on investor education spawned the Portfolio Analysis Tools Hub, an online platform that taps the team’s brainpower to help investors make better investment decisions.

The firm’s product lineup is a mixed bag. To complement its core lineup of fundamentally weighted strategies, WisdomTree has recently launched funds targeting established factors instead of trendy themes—an encouraging reorientation. Yet the shutdown of WisdomTree U.S. Growth and Momentum ETF calls WisdomTree’s commitment to these funds into question, and vestiges from its laxer product-development era look ripe for closure. Its European lineup features risky trading tools that are hard for investors to use well. 

WisdomTree’s future may hinge on WisdomTree Prime, its blockchain-based digital wallet. The launch reflects founder and CEO Jonathan Steinberg’s conviction in the disruptive potential of the blockchain. Prime shouldn’t hurt WisdomTree fund investors (most funds on the platform are zero-fee), but it may distract the firm from shoring up its core offering.

Below Average

Parent

WisdomTree US Smallcap Quality Dividend Growth Fund

DGRS tracks a dividend-weighted index of US small-cap stocks with growth characteristics.

Last week, the S&P 500 notched its worst weekly performance since last October. Not surprisingly, small-cap indexes weren't immune from the weakness.

With Small-Caps, Dividend Buffer Is Meaningful

Designed to provide broad exposure to the Style Box - Small Cap Blend category of the market, the WisdomTree U.S. SmallCap Quality Dividend Growth ETF (DGRS) is a smart beta exchange traded fund launched on 07/25/2013.

Is WisdomTree U.S. SmallCap Quality Dividend Growth ETF (DGRS) a Strong ETF Right Now?

The WisdomTree U.S. SmallCap Quality Dividend Growth Fund aims to track the performance of the WisdomTree U.S. SmallCap Quality Dividend Growth Index. The fund provides exposure to U.S. small cap dividend growing companies through quality and growth screens. It can be used alongside dividend yielding strategies or as an alternative to small cap quality strategies.

DGRS: Combining Small-Cap Quality With Dividend Growth

For years, small-cap stocks weren't associated with dividends, let alone quality, rising payouts. But that narrative is changing for the better.

Dividend Growth Can Be Had With Small-Caps

Large-cap equity prices had their ups and downs over the last three years but mostly kept pace with dividend growth during this cycle. Small caps with dividend growth potential that are resilient to several macroeconomic scenarios warrant further consideration. Financials was essentially diminished to market weight through the 6.5% reduction at the rebalance, while an existing under-weight in Real Estate was reduced further and an over-weight in Materials was pared.

The Fundamental Disconnect In Small Caps: Price Vs. Dividend Growth

DGRS prioritizes dividend stocks with net profit growth prospects supported by the efficient use of capital. Inside the portfolio, there are predominantly mid-cap dividend stocks, adequately valued, though with quality concerns. DGRS significantly underdelivers on EPS and revenue growth.

DGRS: Quality Concerns Remain, Performance Disappoints

There are times when value investing is in style, but it's always a good idea to avoid value traps. That sentiment is particularly applicable today with small-cap stocks and the related exchange traded funds.

Beware Small-Cap Value Traps

Has the time come to invest in small caps? Small-cap firms are pretty cheap on a historical basis, with the Russell 2000's forward p/e ratio 20% below its 10-year average.

Affordable Quality Small Caps Can Appeal

WisdomTree U.S. SmallCap Quality Dividend Growth Fund executes a strategy based on dividends, earnings growth and profitability. It is well-diversified across sectors and holdings. Valuation ratios are similar to the Russell 2000 index but quality is much better.

DGRS: Finding Dividend Growth In Small Caps

DGRS was recently promoted to a 4-star fund ranking within the Morningstar U.S. Small Value universe, a testament to its performance leadership since inception. While the regional banking crisis from earlier this year remains a foremost concern, it's important to realize that DGRS is structurally underweight in these banks due to its factor methodology. By dividend-weighting a high-quality stock basket, DGRS delivers robust profit margins during periods when inflation introduces margin pressure.

10 Fast Facts For DGRS's 10-Year Anniversary

WisdomTree Emerging Markets Quality Dividend Growth Fund

WisdomTree US Quality Dividend Growth Fund

WisdomTree Global ex-U.S. Quality Dividend Growth Fund

WisdomTree Europe Quality Dividend Growth Fund

WisdomTree International Quality Dividend Growth Fund

A key driver of long-term compound returns is dividend growth, which is driven by corporate profitability. Using over 50 years of data, a strategy that identified the top 20% of stocks by profitability posted annual returns of 11.73%, outperforming the lowest ROE group by 451 basis points per year. Profitable companies with excellent margins and efficient assets have the potential for faster dividend growth rates in the future.

The Dividend Driver: Return On Equity

WisdomTree U.S. SmallCap Dividend Fund

Looking behind the curtain in VettaFi's data, it's small-cap dividend ETFs that are picking up steam. In a year defined by the stubborn success of megacap tech names, that may be surprising.

Ride Small Cap Dividend ETFs Interest in This Duo

DGRS: Investing In Quality Dividend-Paying Small-Cap Growth Stocks.

DGRS: Investing In Quality Dividend-Paying Small-Cap Growth Stocks

WisdomTree Europe SmallCap Dividend Fund

Invesco KBW High Dividend Yield Financial ETF

ProShares S&P MidCap 400 Dividend Aristocrats ETF

First Trust SMID Cap Rising Dividend Achievers ETF

Dividend stocks have been beating the market for quite some months. These dividend ETFs have been winning this year.

Winning Dividend ETFs So Far in First Quarter

DGRS is a small-cap fund that invests in dividend stocks with quality and growth properties. The fund holdings are too big for my definition of small-caps.

DGRS: Comes Up Short On Size, Quality And Growth

Avantis U.S. Small Cap Value ETF

VictoryShares US EQ Income Enhanced Volatility Wtd ETF

Pacer US Cash Cows 100 ETF

VictoryShares US Small Cap High Div Volatility Wtd ETF

Invesco Zacks Mid-Cap ETF

Dimensional US Targeted Value ETF

iShares Core Dividend Growth ETF

WisdomTree U.S. High Dividend Fund

SPDR Dow Jones Industrial Average ETF

Global X SuperDividend US ETF

TrueShares Low Volatility Equity Income ETF

WisdomTree U.S. LargeCap Dividend Fund

WisdomTree U.S. MidCap Dividend Fund

WisdomTree U.S. Total Dividend Fund

ALPS Equal Sector Weight ETF

Invesco S&P 500 Equal Weight Communication Services ETF

Fidelity Blue Chip Growth ETF

American Century Focused Dynamic Growth ETF

First Trust Morningstar Dividend Leaders Index Fund

Fidelity MSCI Energy Index ETF

First Trust Consumer Discretionary AlphaDEX Fund

First Trust Technology AlphaDEX Fund

This article summarizes the performance of the entire U.S. equity market by examining 1Y, 3Y, 5Y, and 10Y returns for 850+ ETFs across 40 categories. Major indices declined, but investing in Energy, High-Dividend, and Large-Cap Value ETFs softened the blow. Meanwhile, searching for the bottom in mega-cap growth and thematic ETFs didn't work.

U.S. Equity ETFs: The Best And Worst Of 2022

DGRS focuses on a mid/small-cap dividend-paying equity mix screened for earnings growth and quality characteristics. DGRS has a few advantages, with comparative resilience against the headwinds in 2022 being among them.

DGRS: Mixed Performance, Something To Dislike Regarding Quality

Dividends have been a hot investment in 2022, a trend that looks to carry into 2023 as recession risk increases under an aggressive Federal Reserve monetary policy. Small-caps have been attractively priced for much of 2022 and on a trend-following basis, some opportunities exist within small-cap dividend funds right now.

WisdomTree's U.S. Small-Cap Dividend ETF DGRS Signals Buy

WisdomTree U.S. SmallCap Earnings Fund

Though recessionary fears are top of mind, we believe those with a contrarian view or the confidence to remain invested amid the volatility can still benefit from small-cap allocations. U.S. small caps are notoriously a junky market, with a preponderance of unprofitable companies that have historically ranged around 20% for the Russell 2000.

Bargains Prevail In U.S. Small Caps

Jeremy Schwartz sees opportunities in low-price, high-payout shares.

WisdomTree CIO Betting on Dividend Stocks

Small-cap investing might seem like one of the most contrarian ideas in the face of a recession, but with the space having already priced in recession risk, there are undeniable valuation opportunities happening within small-caps right now, if you don't mind riding out the volatility.

Small-Caps Pricing in the Recession

In the volatile markets of 2022, dividend-paying companies are seeing a big uptick in interest from advisors and investors seeking total returns for their portfolios. While focus traditionally goes to the large-cap companies that have performed strongly in the last decade, in a changing economic environment, small-cap and the pivot to value could offer both [.

The Argument for Small-Cap Dividend Companies

The WisdomTree U.S. SmallCap Quality Dividend Growth Fund seeks to track WisdomTree U.S. SmallCap Quality Dividend Growth Index, before fees and expenses. As of May 31, 2022, small-cap indexes such as Russell 2000 and Russell 2000 Value had more than 22% and slightly above 17% exposure to companies with negative earnings.

Managing Risk Via Small-Cap Dividend Growers

IQ Chaikin U.S. Small Cap ETF

O'Shares US Small-Cap Quality Dividend ETF

SPDR S&P 600 Small Cap ETF

SPDR SSGA US Small Cap Low Volatility Index ETF

WisdomTree Bloomberg US Dollar Bullish Fund

Invesco S&P SmallCap Low Volatility ETF

The small-cap space has lately fared better than the S&P 500.

6 Reasons Why You Should Tap Small-Cap ETFs Now

Not all dividend-paying stocks are alike. Value-screened dividend payers that consistently raise their yields saw strong returns in 2021 and 2022.

News for WisdomTree US Smallcap Quality Dividend Growth Fund ETF (DGRS)