A smart beta exchange traded fund, the iShares Edge MSCI Multifactor Intl ETF (INTF) debuted on 04/28/2015, and offers broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
INTF is managed by Blackrock, and this fund has amassed over $842.65 million, which makes it one of the larger ETFs in the Broad Developed World ETFs. INTF seeks to match the performance of the MSCI World ex USA Diversified Multi-Factor Index before fees and expenses.
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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.30% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 4.18%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Roche Holding Par Ag (ROG) accounts for about 4.61% of the fund's total assets, followed by Rio Tinto Plc (RIO) and Koninklijke Philips Nv (PHIA).
Its top 10 holdings account for approximately 24.88% of INTF's total assets under management.
Performance and Risk
The ETF has lost about -21.33% and is down about -17.03% so far this year and in the past one year (as of 06/04/2020), respectively. INTF has traded between $17.43 and $27.44 during this last 52-week period.
INTF has a beta of 0.91 and standard deviation of 20.03% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 218 holdings, it effectively diversifies company-specific risk.
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 AllWorld exUS 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 AllWorld exUS ETF has $24.09 billion in assets, Vanguard FTSE Developed Markets ETF has $72.98 billion. VEU has an expense ratio of 0.08% 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.
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
Rio Tinto PLC (RIO) : Free Stock Analysis Report
Rogers Corporation (ROG) : Free Stock Analysis Report
Vanguard FTSE AllWorld exUS ETF (VEU): ETF Research Reports
Vanguard FTSE Developed Markets ETF (VEA): ETF Research Reports
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