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New International ETF Enters Market

Zacks Equity Research

New York Life Investments Company launched a new International ETF, IQ 500 International ETF (IQIN) on Dec 13. This ETF has garnered strong interest among investors, amassing $19.7 million in just two weeks (as of Dec 28). Per Sal Bruno, IndexIQ's chief investment officer, IQIN is being seen as a supplement to IQ 50 Percent Hedged FTSE International ETF HFXI. HFXI applies a 50% currency hedge to a portfolio of stocks from the developed markets outside the United States and Canada.

Inside the Successful New ETF

The fund tracks the IQ 500 International Index. The IQ 500 International Index selects and weights securities utilizing a rule-based methodology incorporating three fundamental factors: sales, market share and operating margin.

This ETF tracks equities from 23 countries, excluding the United States. Japan with a 30.5% allocation occupies the top position country-wise, with France (13.1%), Germany (12.2%) and United Kingdom (12.1%) being the remaining countries with double-digit weights. Sector wise, Consumer Discretionary (20.1%), Industrials (18.3%), Consumer Staples (11.7%) and Financials (9.6%) have double-digit allocation each. It charges an expense ratio of 0.25% (read: Should You Tap Japan ETFs on Strong Retail Sales in October?).

How Does It Fit in a Portfolio?

Though the Japan economy — one of the fund’s biggest holdings —struggled in the third quarter of 2018 having shrunk 0.6%, it was mainly due to natural disasters. Investors can expect a rebound in the quarters to come especially with the continuation of the ultra-easy monetary policy.

 In its latest meting in December, the Bank of Japan reconfirmed that the economy is on a strong footing. Expectations of progress in trade talks between China and the United States should also help Japan investing, if it at all happens (read: Japan's Factory Output Falls in November: ETFs in Focus).

The fund also has great exposure to the Euro zone where also policymakers are maintaining equity friendly ultra-low interest rates, though the European Central Bank has confirmed the end of its €2.5-trillion net asset purchase program this month. On a positive note, Italy and the European Union reached a budget deal in December (read: ECB Ends QE: 5 ETF Areas Likely to Gain).

Additionally, the smart beta strategic play helps tap into market inefficiencies in a way, allowing investors an opportunity to diversify their portfolio, reduce risk and earn superior returns over time. The fund’s stock-selection factors help investors reach some winning stocks.


The fund faces competition from popular ETFs in the space like Vanguard FTSE All-World ex-US ETF VEUand Schwab International Equity ETF SCHF. VEU and SCHZ charge lower expense ratios of 0.11% and 0.06%, respectively.

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VANGD-FTSE AWLD (VEU): ETF Research Reports
SCHWAB-INTL EQ (SCHF): ETF Research Reports
IQ-50P HDG INTL (HFXI): ETF Research Reports
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