Dividends

ETF Talk: Wisdom in the Age of the AI Software Smackdown

“The secret of change is to focus all of your energy, not on fighting the old, but on building the new.”

— Socrates

AI-linked software stocks, long favorites of growth investors, have taken a hit recently as fears about future business disruption from rapid advances in AI tools have sparked a sell-off across the sector and dragged the iShares Expanded Tech-Software ETF (IGV) down. Year to date, the fund has slid nearly 20%.

In times like these, knowing where to focus capital is crucial for shielding one’s portfolio against volatility. Against the current market backdrop, the WisdomTree International High Dividend Fund (DTH) stands out as an alternative option, due to its dividend-weighted international equities that aren’t tied to the ebbs and flows of artificial intelligence hype.

The fund holds over 500 companies across developed markets outside the United States and Canada. It has a current yield of 3.41%, offering regular income alongside a globally diversified mix of sectors.

DTH weights companies based on dividends rather than market capitalization, using the WisdomTree DEFA Index to enhance exposure to established, cash-generating firms. Its lower volatility, compared with high-growth tech exchange-traded funds (ETFs), makes it a way to pursue potential alpha while avoiding the swings — and recent pullback — of AI-driven markets.

The fund’s top 10 holdings make up less than 20% of the total portfolio, reflecting a well-diversified structure with reduced reliance on a small group of companies to drive performance. The top holdings are HSBC Holdings plc (LSE: HSBA), 2.95%; Nestlé S.A. (SIX: NESN), 2.42%; Shell plc (LSE: SHEL), 2.09%; Intesa Sanpaolo S.p.A. (BIT: ISP), 2.05%; British American Tobacco p.l.c. (LSE: BATS), 1.87%; BHP Group Limited (ASX: BHP), 1.80%; AXA SA (EPA: CS), 1.50%; Enel SpA (BIT: ENEL), 1.50%; Rio Tinto Group (LSE: RIO), 1.49% and Banco Bilbao Vizcaya Argentaria, S.A. (MCE: BBVA), 1.48%.

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DTH has net assets of $671.31 million and an expense ratio of 0.58%. It is up 5.84% in the last month, 15.70% in the last three months, 12.10% year to date and 47.64% over the past year.

Chart courtesy of www.stockcharts.com.

For investors looking to step away from the concentrated risk of AI and software tech stocks and use a quieter, dividend-based strategy, DTH offers a measured path forward.

As shown in the chart above, DTH has maintained a steady upward trajectory over the last year. That trend may appeal to those prioritizing consistency, income and risk-managed growth over more volatile trades.

In a market often dominated by hype and short-term swings, there is wisdom in patience. DTH, echoing its “WisdomTree” name, is a reminder that sometimes a steadier route can be worth consideration.

However, don’t just take my word for it. Investors should always do their due diligence and evaluate any stock, fund or ETF in the context of their personal investment goals before adding it to their portfolio.

Of course, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Forecasts & Strategies, Tactical Trader, TNT Trader, Five Star Trader, Bullseye Stock Trader, and The Deep Woods. His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.