WisdomTree launches US small-cap dividend growth ETF

Jul 29th, 2013 | By | Category: Equities

WisdomTree, a US-based exchange-traded fund (ETF) provider, has announced the launch of the WisdomTree US SmallCap Dividend Growth ETF (DGRS).

WisdomTree launches US small-cap dividend growth ETF

WisdomTree’s latest fund provides exposure to US small-cap dividend-paying stocks.

The fund, which has been listed on the Nasdaq Stock Market, tracks the proprietary WisdomTree US SmallCap Dividend Growth Index, an index designed to provide exposure to US small-cap dividend-paying stocks with growth characteristics.

The primary starting screening universe for this index is the bottom 25% of the market capitalisation of the WisdomTree Dividend Index after the 300 largest companies have been removed.

From this primary universe, the index comprises the top 50% of companies with the best combined rank of growth and quality factors. The growth factor ranking is based on long-term earnings growth expectations, while the quality factor ranking is based on three year historical averages for return on equity and return on assets.

The index is weighted by dividends annually to reflect the proportionate share of the aggregate cash dividends each component company is projected to pay in the coming year, based on the most recently declared dividend per share.

Jeremy Schwartz, Director of Research at WisdomTree, said: “WisdomTree’s 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 US market’s small-cap dividend growth leaders, a segment we believe offers some of the most attractive dividend growth opportunities.”

He added: “Many assume that high quality, dividend growth opportunities are confined to blue chip, large-cap stocks. But in an environment where the US economy is improving and interest rates are beginning to rise, small caps, more closely tied to the US economy, will likely become more attractive than large caps, which are more globally sensitive.”

The new fund is WisdomTree’s third dividend growth ETF, following the WisdomTree US Dividend Growth ETF (DGRW) and the WisdomTree Global ex-US Growth ETF (DNL). It has an expense ratio of 0.38%.

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