This Small-Cap ETFs Offers Big Value and Dividends

Core Insights - The WisdomTree U.S. SmallCap Dividend Fund (DES) has shown strong performance, up nearly 12% year-to-date, outperforming both the Russell 2000 and Russell 2000 Value indexes [1] - DES has been recognized as one of the best high-dividend ETFs by Morningstar, highlighting its appeal to investors seeking value and dividends outside the large-cap space [1] Performance and Strategy - DES follows the WisdomTree U.S. SmallCap Dividend Index, which weights components by expected dividends, favoring larger companies and rewarding those with quality and momentum traits [1] - The fund's methodology allows it to consistently outperform the Russell 2000 in terms of profitability, avoiding companies that do not generate profits [1] - DES employs a contrarian approach by restoring stocks' dividend weights at each annual rebalance, effectively doubling down on underperforming stocks while trimming exposure to top performers [1] Value Proposition - The fund's strategy emphasizes unloved stocks, creating a deeper-value portfolio compared to the Russell 2000 Value, which can lead to underperformance during value slumps [1] - Despite potential drawbacks, the integration of quality and momentum into its weighting has benefited DES during growth-friendly environments, allowing it to outperform over half of small-value funds in 2023 and 2024 [1]