Is WisdomTree U.S. MidCap ETF (EZM) a Strong ETF Right Now?
Making its debut on 02/23/2007, smart beta exchange traded fund WisdomTree U.S. MidCap ETF (EZM) provides investors broad exposure to the Style Box – Mid Cap Value category of the market.
– Zacks What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies–popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors–think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting–not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Wisdomtree. It has amassed assets over $795.35 million, making it one of the average sized ETFs in the Style Box – Mid Cap Value. Before fees and expenses, EZM seeks to match the performance of the WisdomTree U.S. MidCap Earnings Index.
The WisdomTree U.S. MidCap Index is a fundamentally weighted index that measures the performance of earnings-generating companies within the mid-capitalization segment of the U.S. Stock Market.
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.38%.
It’s 12-month trailing dividend yield comes in at 1.14%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it’s still important for investors to research a fund’s holdings.
For EZM, it has heaviest allocation in the Financials sector –about 23.40% of the portfolio –while Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Cleveland-Cliffs Inc (CLF) accounts for about 0.83% of total assets, followed by Nrg Energy Inc (NRG) and Dish Network Corp (DISH).
The top 10 holdings account for about 7.35% of total assets under management.
Performance and Risk
The ETF has lost about -5.05% so far this year and is up about 14.47% in the last one year (as of 02/21/2022). In the past 52-week period, it has traded between $47.94 and $57.18.
The ETF has a beta of 1.28 and standard deviation of 29.45% for the trailing three-year period, making it a medium risk choice in the space. With about 581 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree U.S. MidCap ETF is an excellent option for investors seeking to outperform the Style Box – Mid Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Russell MidCap Value ETF (IWS) tracks Russell MidCap Value Index and the Vanguard MidCap Value ETF (VOE) tracks CRSP U.S. Mid Cap Value Index. IShares Russell MidCap Value ETF has $14.65 billion in assets, Vanguard MidCap Value ETF has $15.99 billion. IWS has an expense ratio of 0.23% and VOE 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 Style Box – Mid Cap Value.
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 U.S. MidCap ETF (EZM): ETF Research Reports
NRG Energy, Inc. (NRG): Free Stock Analysis Report
DISH Network Corporation (DISH): Free Stock Analysis Report
ClevelandCliffs Inc. (CLF): Free Stock Analysis Report
Vanguard MidCap Value ETF (VOE): ETF Research Reports
iShares Russell MidCap Value ETF (IWS): ETF Research Reports
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Zacks Investment Research
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