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Is WisdomTree International Hedged Quality Dividend Growth ETF (IHDG) a Strong ETF Right Now?

Zacks Equity Research

The WisdomTree International Hedged Quality Dividend Growth ETF (IHDG) was launched on 05/07/2014, and is a smart beta exchange traded fund designed to offer broad exposure to the Broad Developed World ETFs category of the 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.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

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.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

Managed by Wisdomtree, IHDG has amassed assets over $786.52 million, making it one of the larger ETFs in the Broad Developed World ETFs. Before fees and expenses, IHDG seeks to match the performance of the WisdomTree International Hedged Quality Dividend Growth Index.

The WisdomTree International Hedged Quality Dividend Growth Index is designed to provide exposure to the developed market companies while at the same time neutralizing exposure to fluctuations between the value of foreign currencies and the U.S. dollar.

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

With one of the more expensive products in the space, this ETF has annual operating expenses of 0.58%.

It's 12-month trailing dividend yield comes in at 1.74%.

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.

Taking into account individual holdings, Novo Nordisk A/s (NOVOB) accounts for about 4.59% of the fund's total assets, followed by Unilever Nv (UNA) and Industria De Diseno Textil (ITX).

Its top 10 holdings account for approximately 34.27% of IHDG's total assets under management.

Performance and Risk

So far this year, IHDG has lost about -2.20%, and is up roughly 11.16% in the last one year (as of 08/10/2020). During this past 52-week period, the fund has traded between $26.65 and $37.66.

The ETF has a beta of 0.75 and standard deviation of 19% for the trailing three-year period, making it a medium risk choice in the space. With about 230 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree International Hedged Quality Dividend Growth ETF is not a suitable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.

IShares Core Dividend Growth ETF (DGRO) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $11.52 billion in assets, Vanguard Dividend Appreciation ETF has $45.91 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.

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.

Bottom Line

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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WisdomTree International Hedged Quality Dividend Growth ETF (IHDG): ETF Research Reports
 
iShares Core Dividend Growth ETF (DGRO): ETF Research Reports
 
Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports
 
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