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 U.S. equity 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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track 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
Managed by Blackrock, INTF has amassed assets over $700.57 M, making it one of the average sized 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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.30%.
INTF's 12-month trailing dividend yield is 3.16%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Looking at individual holdings, Axa Sa (CS) accounts for about 2.19% of total assets, followed by Hitachi Ltd (6501) and Amadeus It Group Sa (AMS).
The top 10 holdings account for about 17.42% of total assets under management.
Performance and Risk
So far this year, the ETF has added roughly 2.89%, and it's up approximately 15.70% in the last one year (as of 05/17/2018). INTF has traded between $26.17 and $31.08 in the past 52-week period.
The ETF has a beta of 0.97 and standard deviation of 15.12% for the trailing three-year period, making it a medium 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 $23.78 B in assets, Vanguard FTSE Developed Markets ETF has $71.63 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
ISHARS-FS INTRN (INTF): ETF Research Reports
VANGD-FTSE AWLD (VEU): ETF Research Reports
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