Published Thu, 17 Sep 2020 23:57:05 -0400 on Seeking Alpha
Seeking AlphaETF AnalysisA Closer Look At WisdomTree MidCap Dividend ETFSep. 17, 2020 11:57 PM ET|| About: WisdomTree MidCap Dividend ETF (DON)by: Vasily ZyryanovVasily Zyryanov Long/Short EquitySummaryWith total assets of ~$2.52 billion, the WisdomTree MidCap Dividend ETF has a nicely diversified portfolio of 334 stocks.
DON's 10-year total returns are below the TRs of the S&P 500 and of a few of its closest peers.
The portfolio is dominated by Financials, Real Estate, and Industrials, while Healthcare and IT have much smaller contributions, which partly explains the underperformance.
The essential advantage of DON is monthly distributions.
2020 is a remarkable year for investors across the globe for a few reasons. First, despite the coronavirus and all the damage that the counter-Covid-19 measures have inflicted on the global economy, the U.S. market has fully erased its March losses and touched an all-time high, which left many macro-focused bears confused and disappointed.
At the same time, the year is infamous for the great dividend reset, as a plethora of public companies aggressively scaled down payouts or even suspended dividends to address urgent liquidity issues and avoid a cash crunch. That exacerbated already barely simple situation both for fund managers and retail investors who had to cope with almost-zero or sub-zero bond yields – a direct consequence of the accommodating policy of central banks – which largely complicated the process of building a portfolio of securities calibrated to yield a constant (and perhaps even growing) income stream.
What dividend-oriented investors, who prefer to simplify the portfolio-building routine by investing in ETFs instead of single stocks, might do in this environment? For example, a few might opt for relatively high-yield ETFs like iShares Emerging Markets Dividend ETF (DVYE), which I have discussed recently. The issue here is that EMs are exposed to a plethora of risks, from geopolitics to... Read more