In a market where correlations between equity and fixed income remain unpredictable, financial advisors are reconsidering what qualifies as a true “core” equity allocation. For those seeking a large-cap strategy that emphasizes stability, dividend growth, and quality, the WisdomTree U.S. Quality Dividend Growth Fund (ticker: DGRW) offers a rules-based approach that has withstood market stress, focusing on dividend-paying large-cap companies with growth characteristics.
In an interview with The Wealth Advisor’s Scott Martin, Jeff Weniger, Head of Equity Strategy at WisdomTree, discussed how DGRW seeks to deliver consistency through disciplined dividend growth screening and proprietary quality metrics. The flagship fund launched in 2013 and has since grown into what Weniger calls the firm’s “little darling,” managing more than $15 billion in assets and including upwards of 300 holdings. Compared to traditional dividend benchmarks or even the S&P 500, DGRW pursues a fundamentally different approach—aiming to balance growth potential with downside resilience. “It’s got quality in the name, and it’s got dividends in the name,” Weniger says. “That’s exactly what it’s doing.”
Beyond Backward-Looking Dividend Screens
Many dividend-oriented funds rely on long histories of consistent dividend growth to screen for inclusion. However, there’s an argument for a fundamental flaw in that approach: it can prioritize outdated company behavior instead of current financial strength—and Weniger pushes back on dividend strategies that rely heavily on long historical lookbacks.
“Oftentimes, what you hear is, ‘Okay, we’re going to look back 15, 20 years ago,’” he says. “And it’s kind of like those old sports stats—‘The Dallas Cowboys over the last 25 seasons . . .’ Well, wait a minute. Twenty-five years ago, the quarterback was a different guy.” In essence: past dividend behavior doesn’t always reflect a company’s current strength or forward potential, especially in a market where leadership can shift rapidly.
Instead of relying on decades-old dividend history, DGRW screens for forward-looking quality indicators—specifically, companies with high return on equity (ROE) and high return on assets (ROA). That distinction matters, Weniger argues, because ROE alone can be easily inflated by leverage.
“You could take a mediocre business and make that ROE at 25 or 30 easily. It’s called get on the phone with your lender and take on debt,” Weniger says. “That’s wonderful in an economic expansion when money’s flowing, but as soon as the storm clouds come, that stuff gets taken out.”
By emphasizing a combination of profitability and balance sheet strength, DGRW seeks to identify sustainable dividend growers, not just high-yield payers with financial engineering behind them.
“Rather than just taking return on equity as your quality screen, we take return on assets and return on equity,” Weniger says.
Modified Dividend Weighting: An Alternative to Market Cap
Where traditional indexes weight companies by market capitalization, DGRW employs dividend weighting. The fund’s structure gives greater prominence to companies growing their dividends faster than the broader market—offering a potential edge over time.
“Rather than market cap being your X factor for how much a company will be in the ETF, it’s your dividend as a proportion of the total pie,” Weniger explains. “If a corporation is in there and their dividend is growing at a faster pace than societal dividends, it’ll naturally melt up more in the fund.”
The result is a portfolio that is often classified as “large blend” but carries a subtle value tilt—anchored by profitable, growing companies with discipline around capital return.
Performance Under Pressure
In volatile market environments, dividend strategies can sometimes fall short—particularly those that overweight high-yield names with structural issues. DGRW, by contrast, aims to deliver resilience through its quality-focused methodology.
Weniger points to 2022 as a litmus test. “The S&P was down 18% that year. The NASDAQ was down 30%. DGRW was down 6%.”
DGRW’s relative outperformance in 2022 has made it a compelling candidate for equity allocations within portfolios where fixed income is no longer a reliable ballast. As Weniger notes, “Most of the appeal in the last few years of DGRW was people saying, ‘How did this thing do back in 2022?’ We saved 1,200 [basis points] relative to the S&P that year.”
Adapting to Dividend Growth in Real Time
DGRW’s rules-based structure allows it to evolve with the dividend landscape. For years, the strategy maintained its large-blend classification with a modest value tilt, even without exposure to many of the mega-cap technology names—popularly known as the FANGs (Facebook [now Meta], Amazon, Netflix, and Google [Alphabet]) or the Magnificent Seven (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla)—that have dominated recent market cycles.
Despite that absence, the fund remained competitive. “It was taking 300 stocks,” Weniger says, “no FANGs, no Mag Seven, and still holding the line all these years.”
However, the strategy’s ability to adapt to new dividend initiators reflects a key strength in its design. So, when Alphabet initiated a dividend in 2024, the fund captured it automatically—no manual override or legacy track record needed.
Since 2024, nine S&P 500 companies—including Meta and Salesforce—have initiated dividends, signaling confidence in cash flow durability. DGRW also incorporates those names, helping advisors stay aligned with leadership trends without relying solely on legacy dividend payers.
Positioning as a Core Equity Holding
DGRW is often used as a core equity position, either as a replacement for broad large-cap indexes or as an augmentation for advisors who want more control over quality and dividend characteristics.
“It’s a core replacement,” Weniger says. “If you want to talk style boxes, it’s in that large-blend category, but it has an ever-so-slight value tilt.”
The fund’s current exposure includes about 19% weighting to Magnificent Seven names—less than the 30% found in the S&P 500—and a 45% overall overlap with the index. For advisors concerned about concentration risk in traditional large-cap benchmarks, DGRW offers a more balanced allocation without abandoning market leaders entirely.
Extending the Philosophy Across Asset Classes
According to Weniger, the firm has expanded DGRW’s methodology into other regions and market segments, including the WisdomTree U.S. SmallCap Quality Dividend Growth Fund (ticker: DGRS), the WisdomTree International Quality Dividend Growth Fund (ticker: IQDG), and the WisdomTree Emerging Markets Quality Dividend Growth Fund, ticker: DGRE). Advisors using DGRW at the core can extend that framework across the entire portfolio.
“If I philosophically believe that this will be alpha creative through time, then why am I doing it solely in U.S. large?” he explains. “Why shouldn’t I also run this in, let’s say, Europe or broad developed or emerging? And we’ve had a ton of success.”
Firms that want to standardize how they define quality and dividend growth can use the broader WisdomTree lineup as a consistent foundation.
“Once you have DGRW as your intellectual property, and this is your framework for essentially the way your firm thinks about creating a dividend screen, a quality screen, a collaboration that way, then you can get the branches.”
Advisors Looking Ahead: Correlations, Clarity, and Communication
As market conditions remain uncertain, Weniger emphasizes the importance of having reliable core equity exposure—particularly when fixed income may not offer the protection it once did.
“I don’t know what the correlation is going to be between equity and fixed income in the next 12–24 months,” he says. “But I do know this: the last time fixed income decided to fall out of bed, in 2022, equity fell out of bed with it, and it’s the single biggest nightmare I’m hearing.”
The broader market context is central to how advisors are evaluating equity sleeves today. Weniger sees DGRW as a fund that seeks to address those concerns through a lower down capture, consistent methodology, and clearly articulated rationale.
“If the 60 decides to fall out of bed at the same time as the 40, what am I going to be in where I’m not going to have as difficult conversations as I had back in 2022?” Weniger says. “Run your screens for those types of ETFs. I think DGRW is one of those that’s going to pass it with flying colors.”
The fund’s quality screens and dividend focus create a different return stream than broad market exposure, potentially offering more stability during periods when traditional diversification benefits break down.
Confidence Through Clarity
In an era when bond-equity correlations are no longer predictable, advisors are seeking strategies that offer transparency and durability. Weniger underscores the importance of tools that help facilitate communication with clients.
WisdomTree aims to equip advisors with tools that go beyond a simple fact sheet. Weniger points to resources like the PATH software and deep-dive product decks, which provide detailed performance metrics, quality comparisons, and factor analysis.
“If you want to get in the weeds on the product, the rationale behind the product, each one of those has that on the product landing page,” he says. “There’s no shortage of ways to learn just by navigating around wisdomtree.com.”
A 12-Year Track Record and Evolving Asset Base
DGRW, which launched in May 2013, sat at more than $15 billion in assets under management as of June 30, 2025. Its average annual return since inception was 12.82% (net asset value), with 15.12% annualized over five years and 9.02% over the past year. While not always matching the full upside of high-growth benchmarks, the fund has carved out a reputation for resilience, especially during volatility.
WisdomTree now manages more than $115.8 billion in assets across a full ETF suite, including strategies for Europe, Japan, India, and gold. The firm’s global coverage makes it one of the few providers with building blocks across major geographies and asset classes using a consistent philosophy.
“We have all the asset classes covered,” Weniger adds. “And we have something in every asset class. So, it’s great. It’s wonderful.”
DGRW as a Foundation for Uncertain Markets
DGRW serves as a core solution for advisors prioritizing dividend discipline, balance sheet strength, and quality. Its rules-based methodology seeks to avoid the concentration and valuation extremes of cap-weighted benchmarks while maintaining growth exposure.
Over its 12-year history, DGRW has shown a differentiated performance profile—especially in volatile environments. “It’s had a nice down capture through time,” Weniger says, “because you’re running quality screens with dividends.”
With a clear strategy, deep resources, and adaptability, DGRW offers a structured approach to large-cap equity that aims to evolve with shifting market conditions.
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Additional Resources
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Disclosures
Performance is historical and does not guarantee future results. Current performance may be lower or higher than quoted. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. For the most recent month-end and standardized performance, click here.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Fund before investing. For a prospectus or, if available, the summary prospectus containing this and other important information about the Fund, call 866.909.9473 or visit WisdomTree.com/investments. Read the prospectus or, if available, the summary prospectus carefully before investing.
There are risks associated with investing, including possible loss of principal. Funds focusing their investments on certain sectors increase their vulnerability to any single economic or regulatory development. This may result in greater share price volatility. Please read the Fund’s prospectus for specific details regarding the Fund’s risk profile.
Dividends are not guaranteed, and a company currently paying dividends may cease paying dividends at any time.
Basis point: 1/100th of 1 percent.
Alpha: Can be discussed as both risk-adjusted excess return relative to a specific benchmark, or absolute excess return relative to a benchmark. It is sometimes more generally referred to as excess returns in general.
The WisdomTree U.S. Quality Dividend Growth Index is a fundamentally weighted index that consists of dividend-paying common stocks with growth characteristics.
The S&P 500 Index is a capitalization-weighted index of 500 stocks selected by the Standard & Poor’s Index Committee designed to represent the performance of the leading industries in the U.S. economy.
WisdomTree Funds are distributed by Foreside Fund Services, LLC, in the U.S.
