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Is WisdomTree International Equity ETF (DWM) a Strong ETF Right Now?

Making its debut on 06/16/2006, smart beta exchange traded fund WisdomTree International Equity ETF (DWM) provides investors 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.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

Because the fund has amassed over $515.93 million, this makes it one of the average sized ETFs in the Broad Developed World ETFs. DWM is managed by Wisdomtree. This particular fund, before fees and expenses, seeks to match the performance of the WisdomTree International Equity Index.

The WisdomTree International Equity Index is a fundamentally weighted Index that measures the performance of dividend-paying companies in the industrialized world, excluding Canada and the United States.

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.

Annual operating expenses for this ETF are 0.48%, making it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 0%.

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, Bhp Group Ltd (BHP) accounts for about 3% of total assets, followed by Nestle Sa (NESN) and Rio Tinto Plc (RIO).

DWM's top 10 holdings account for about 13.94% of its total assets under management.

Performance and Risk

The ETF has lost about -22.88% so far this year and is down about -19.96% in the last one year (as of 10/03/2022). In the past 52-week period, it has traded between $39.86 and $55.69.

The ETF has a beta of 0.77 and standard deviation of 21.76% for the trailing three-year period, making it a low risk choice in the space. With about 859 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree International Equity ETF is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could 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 $39.72 billion in assets, iShares Core MSCI EAFE ETF has $75.60 billion. 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.

Bottom Line

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.


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WisdomTree International Equity ETF (DWM): ETF Research Reports
 
BHP Group Limited Sponsored ADR (BHP): Free Stock Analysis Report
 
Rio Tinto PLC (RIO): Free Stock Analysis Report
 
iShares MSCI EAFE ETF (EFA): ETF Research Reports
 
iShares Core MSCI EAFE ETF (IEFA): ETF Research Reports
 
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