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Is iShares Edge MSCI Multifactor Intl ETF (INTF) a Strong ETF Right Now?

Zacks Equity Research

The iShares Edge MSCI Multifactor Intl ETF (INTF) made its debut on 04/28/2015, and is a smart beta exchange traded fund that provides broad exposure to the Broad Developed 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.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

INTF is managed by Blackrock, and this fund has amassed over $1.04 B, which makes it one of the larger ETFs in the Broad Developed World ETFs. Before fees and expenses, INTF seeks to match the performance of the MSCI World ex USA Diversified Multi-Factor Index.

The MSCI World ex USA Diversified Multi-Factor Index is designed to select equity securities from MSCI World ex USA Index that have high exposure to four investment style factors: value, quality, momentum and low size, while maintaining a level of risk similar to that of the Parent Index.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

With one of the cheaper products in the space, this ETF has annual operating expenses of 0.30%.

INTF's 12-month trailing dividend yield is 3.10%.

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.

Taking into account individual holdings, Roche Holding Par Ag (ROG) accounts for about 3.55% of the fund's total assets, followed by Hitachi Ltd and Woolworths Group Ltd (WOW).

INTF's top 10 holdings account for about 20.75% of its total assets under management.

Performance and Risk

So far this year, INTF has gained about 12.41%, and it's up approximately 8.29% in the last one year (as of 10/25/2019). During this past 52-week period, the fund has traded between $22.95 and $27.

The ETF has a beta of 0.90 and standard deviation of 11.94% for the trailing three-year period, making it a medium risk choice in the space. With about 230 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Edge MSCI Multifactor Intl ETF is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

Vanguard FTSE All-World ex-US ETF (VEU) tracks FTSE All-World ex US Index and the Vanguard FTSE Developed Markets ETF (VEA) tracks FTSE Developed All Cap ex US Index. Vanguard FTSE All-World ex-US ETF has $24.50 B in assets, Vanguard FTSE Developed Markets ETF has $74.24 B. VEU has an expense ratio of 0.09% and VEA charges 0.05%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed 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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iShares Edge MSCI Multifactor Intl ETF (INTF): ETF Research Reports
 
Rogers Corporation (ROG) : Free Stock Analysis Report
 
Vanguard FTSE Developed Markets ETF (VEA): ETF Research Reports
 
Vanguard FTSE All-World ex-US ETF (VEU): ETF Research Reports
 
WideOpenWest, Inc. (WOW) : Free Stock Analysis Report
 
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Zacks Investment Research