Designed to provide broad exposure to the Broad Developed World ETFs category of the market, the iShares Edge MSCI Multifactor Intl ETF (INTF) is a smart beta exchange traded fund launched on 04/28/2015.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
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.
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.
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 $958.22 M, this makes it one of the larger ETFs in the Broad Developed World ETFs. INTF is managed by Blackrock. 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for INTF are 0.30%, which makes it one of the cheaper products in the space.
INTF's 12-month trailing dividend yield is 2.47%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Amadeus It Group Sa (AMS) accounts for about 2.22% of the fund's total assets, followed by Axa Sa (CS) and Woolworths Group Ltd (WOW).
Its top 10 holdings account for approximately 18.11% of INTF's total assets under management.
Performance and Risk
Year-to-date, the iShares Edge MSCI Multifactor Intl ETF return is roughly 6.07% so far, and is down about -15.06% over the last 12 months (as of 01/17/2019). INTF has traded between $22.95 and $31.08 in this past 52-week period.
INTF has a beta of 0.89 and standard deviation of 14.41% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 232 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 $22.54 B in assets, Vanguard FTSE Developed Markets ETF has $67.98 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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Credit Suisse Group (CS) : 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
American Shared Hospital Services (AMS) : Free Stock Analysis Report
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