Is FlexShares International Quality Dividend ETF (IQDF) a Strong ETF Right Now?
The FlexShares International Quality Dividend ETF (IQDF) made its debut on 04/12/2013, and is a smart beta exchange traded fund that provides broad exposure to the World ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $516.70 million, this makes it one of the average sized ETFs in the World ETFs. IQDF is managed by Flexshares. IQDF seeks to match the performance of the Northern Trust International Quality Dividend Index before fees and expenses.
The Northern Trust International Quality Dividend Index is designed to provide exposure to a high-quality income-oriented portfolio of long-only international securities issued by non-U.S.-based companies, with an emphasis on long-term capital growth and a targeted overall beta that is similar to that of the Northern Trust International Large Cap Index.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.47% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.82%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Bhp Group Ltd Common Stock Aud 0 (BHP) accounts for about 3.12% of total assets, followed by Royal Bank Of Canada Common Stock Cad 0 (RY) and Novo Nordisk A/s Common Stock Dkk 0.2 (NOVOb.CO).
Performance and Risk
Year-to-date, the FlexShares International Quality Dividend ETF has added roughly 7.99% so far, and was up about 26.33% over the last 12 months (as of 10/17/2023). IQDF has traded between $18.11 and $23.06 in this past 52-week period.
IQDF has a beta of 0.86 and standard deviation of 15.75% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 278 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares International Quality Dividend ETF is a reasonable option for investors seeking to outperform the World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
FlexShares International Quality Dividend Defensive ETF (IQDE) tracks Northern Trust International Quality Dividend Defensive Index and the FlexShares International Quality Dividend Dynamic ETF (IQDY) tracks Northern Trust International Quality Dividend Dynamic Index. FlexShares International Quality Dividend Defensive ETF has $27.31 million in assets, FlexShares International Quality Dividend Dynamic ETF has $68.20 million. IQDE has an expense ratio of 0.47% and IQDY charges 0.47%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the World ETFs.
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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FlexShares International Quality Dividend ETF (IQDF): ETF Research Reports
BHP Group Limited Sponsored ADR (BHP) : Free Stock Analysis Report
Royal Bank Of Canada (RY) : Free Stock Analysis Report
FlexShares International Quality Dividend Dynamic ETF (IQDY): ETF Research Reports
FlexShares International Quality Dividend Defensive ETF (IQDE): ETF Research Reports
