Launched on 04/28/2015, the iShares Edge MSCI Multifactor Intl ETF (INTF) is a smart beta exchange traded fund offering 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 $1.22 B, this makes it one of the larger ETFs in the Broad Developed World ETFs. INTF is managed by Blackrock. This particular fund 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for INTF are 0.30%, which makes it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 3.29%.
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.
Taking into account individual holdings, Roche Holding Par Ag (ROG) accounts for about 3.42% of the fund's total assets, followed by Hitachi Ltd and Rio Tinto Plc (RIO).
The top 10 holdings account for about 20.37% of total assets under management.
Performance and Risk
The ETF has added about 6.13% so far this year and is down about -6.64% in the last one year (as of 08/20/2019). In the past 52-week period, it has traded between $22.95 and $28.47.
INTF has a beta of 0.89 and standard deviation of 12.05% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 222 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 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 $22.86 B in assets, Vanguard FTSE Developed Markets ETF has $69.53 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.
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
Rio Tinto PLC (RIO) : Free Stock Analysis Report
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