If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the WisdomTree U.S. LargeCap ETF (EPS), a passively managed exchange traded fund launched on 02/23/2007.
The fund is sponsored by Wisdomtree. It has amassed assets over $672.40 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.08%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.87%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 22.50% of the portfolio. Financials and Healthcare round out the top three.
Looking at individual holdings, Apple Inc (AAPL) accounts for about 5.50% of total assets, followed by Alphabet Inc-Cl A (GOOGL) and Microsoft Corp (MSFT).
The top 10 holdings account for about 29.24% of total assets under management.
Performance and Risk
EPS seeks to match the performance of the WisdomTree U.S. Earnings 500 Index before fees and expenses. The WisdomTree U.S. LargeCap Index is a fundamentally weighted index that measures the performance of earnings-generating companies within the large-capitalization segment of the U.S. Stock Market.
The ETF return is roughly 7.55% so far this year and it's up approximately 2.98% in the last one year (as of 05/29/2023). In the past 52-week period, it has traded between $38.39 and $46.02.
The ETF has a beta of 1 and standard deviation of 18.07% for the trailing three-year period, making it a medium risk choice in the space. With about 501 holdings, it effectively diversifies company-specific risk.
WisdomTree U.S. LargeCap ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, EPS is a good option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $48.52 billion in assets, Vanguard Value ETF has $98.85 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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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