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?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Blackrock. INTF has been able to amass assets over $999.88 M, making it one of the larger ETFs in the Broad Developed World ETFs. INTF, before fees and expenses, 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
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.
Operating expenses on an annual basis are 0.30% for this ETF, which makes it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 2.62%.
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.
When you look at individual holdings, Amadeus It Group Sa (AMS) accounts for about 2.21% of the fund's total assets, followed by Hitachi Ltd and Axa Sa (CS).
Its top 10 holdings account for approximately 18.2% of INTF's total assets under management.
Performance and Risk
The ETF has lost about -15.52% so far this year and is down about -12.51% in the last one year (as of 12/20/2018). In the past 52-week period, it has traded between $23.75 and $31.08.
The ETF has a beta of 0.96 and standard deviation of 14.24% for the trailing three-year period, making it a medium risk choice in the space. With about 231 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 $20.60 B in assets, Vanguard FTSE Developed Markets ETF has $63.61 B. VEU has an expense ratio of 0.11% and VEA charges 0.07%.
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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ISHARS-FS INTRN (INTF): ETF Research Reports
Credit Suisse Group (CS) : Free Stock Analysis Report
VANGD-FTSE DV M (VEA): ETF Research Reports
VANGD-FTSE AWLD (VEU): ETF Research Reports
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