How This Global Small Cap ETF Fits Into a Long-Term Strategy

By Patrick Sanders – Feb 17, 2026 at 3:30PM ESTKey PointsThe S&P 500 is easy for investors to access, but it's dominated by large-cap U.S. companies.An ideal complement to these holdings is the WisdomTree International SmallCap Dividend Fund. This ETF focuses on other developed countries and includes over 1,000 small-cap dividend stocks.We’re bullish on these 10 stocks ›NYSEMKT: DLSWisdomTree Trust - WisdomTree International SmallCap Dividend FundToday's Changeangle-down(-0.19%) $0.17Current Price$88.09Price as of February 17, 2026 at 4:00 PM ETYou get instant diversification and a solid dividend, too. It's surprisingly easy for investors to let their portfolios get out of balance. Even the great Warren Buffett, when he was CEO of Berkshire Hathaway, allowed the company's stake in Apple to swell to become nearly half of Berkshire Hathaway's entire equity portfolio. Diversification is one of the keys to investing, but if you're in the U.S., it can be tempting to overload on U.S.-based stocks. And that's particularly true in today's environment, when the S&P 500 is dominated by a handful of tech stocks like Nvidia, Microsoft, and the aforementioned Apple. Image source: Getty Images. But there's an easy solution. And as it so happens, the answer lies in a fund that provides exposure to small-cap stocks with an international flavor -- nicely balancing any investment portfolio dominated by the "Magnificent Seven" grouping. And just to sweeten the deal, this fund is outperforming the S&P 500 over the last year by a wide margin. Meet the DLS ETF The WisdomTree International SmallCap Dividend Fund (DLS 0.19%) is an ideal exchange-traded fund for this situation. The ETF tracks dividend-paying companies in the WisdomTree International SmallCap Dividend index, which includes small-cap stocks in developed markets outside the U.S. and Canada. ExpandNYSEMKT: DLSWisdomTree Trust - WisdomTree International SmallCap Dividend FundToday's Change(-0.19%) $-0.17Current Price$88.09Key Data PointsDay's Range$87.30 - $88.3052wk Range$59.00 - $88.94Volume42K The ETF currently holds just over 1,000 stocks, none of which has a weighting of more than 0.65%. That provides investors with ample diversification, as the top 10 stocks in the ETF account for only 5% of the ETF's total weighting. You won't have any Berkshire Hathaway-Apple issues with this fund. And given the S&P 500's heavy weighting toward tech stocks, the DLS ETF offers investors significant exposure to sectors that could easily be overlooked. Sector Percentage of Investment Industrials 27.5% Consumer Cyclical 13.6% Financial Services 13.2% Basic Materials 9.3% Real Estate 8.1% Consumer Defensive 7.8% Technology 7.7% Others 20.8% Data source: Morningstar. How does the DLS ETF perform? Over the last year, the WisdomTree International SmallCap Dividend Fund has been a big winner for investors. The fund is up 35% in the last year, topping the 13% gain of the S&P 500. But remember this is a dividend ETF. And with a yield of 3.7%, the DLS ETF gives you even more opportunities to grow your portfolio. Including the dividend into the fund's total return over the last year, DLS provided a 41% return over the last 12 months versus 14.3% for the S&P 500. ^SPX data by YCharts Why the DLS ETF works Even if you're investing in an index fund like the S&P 500, you can have holes in your portfolio. The S&P 500 focuses on large companies, is heavily weighted toward the U.S., and is overweighted to major tech stocks. The WisdomTree International SmallCap Dividend Fund ETF helps fill those holes with small-cap stocks outside North America and avoids overreliance on tech stocks. And on top of that, it pays a great dividend. With its international flair and exposure to small-cap stocks, the DLS ETF can be an important part of a long-term investment strategy.About the AuthorPatrick Sanders is a contributing Motley Fool stock market analyst covering stocks and ETFs in the consumer, financial, and technology sectors. Before joining The Motley Fool, he was an assistant managing editor at U.S. News & World Report and a news editor for The Associated Press. He holds a bachelor’s degree in journalism from Marshall University.TMFPatrickStocks MentionedWisdomTree Trust - WisdomTree International SmallCap Dividend FundNYSEMKT: DLS$88.09 (0.19%) $0.17*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.