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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
INTF is managed by Blackrock, and this fund has amassed over $1.21 B, 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
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.
Operating expenses on an annual basis are 0.30% for this ETF, which makes it one of the cheaper products in the space.
INTF's 12-month trailing dividend yield is 2.30%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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 2.28% of the fund's total assets, followed by Axa Sa (CS) and Hitachi Ltd.
Its top 10 holdings account for approximately 18.76% of INTF's total assets under management.
Performance and Risk
So far this year, INTF has added about 13.83%, and is down about -5.99% in the last one year (as of 04/17/2019). During this past 52-week period, the fund has traded between $22.95 and $29.91.
INTF has a beta of 0.91 and standard deviation of 13.58% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 230 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 $23.57 B in assets, Vanguard FTSE Developed Markets ETF has $72.47 B. VEU has an expense ratio of 0.09% 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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iShares Edge MSCI Multifactor Intl ETF (INTF): ETF Research Reports
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
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