A smart beta exchange traded fund, the WisdomTree International Hedged Quality Dividend Growth Fund (IHDG) debuted on 05/07/2014, and offers 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.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Wisdomtree. It has amassed assets over $456.14 M, making it one of the average sized ETFs in the Broad Developed World ETFs. IHDG seeks to match the performance of the WisdomTree International Hedged Quality Dividend Growth Index before fees and expenses.
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.
Annual operating expenses for IHDG are 0.58%, which makes it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.10%.
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, Industria De Diseno Textil (ITX) accounts for about 4.57% of the fund's total assets, followed by Unilever Nv (UNA) and British American Tobacco Plc (BATS).
Its top 10 holdings account for approximately 30.86% of IHDG's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree International Hedged Quality Dividend Growth Fund has added about 21.89% so far, and was up about 7.27% over the last 12 months (as of 09/10/2019). IHDG has traded between $26.92 and $33.71 in this past 52-week period.
The ETF has a beta of 0.77 and standard deviation of 11.47% for the trailing three-year period, making it a medium risk choice in the space. With about 289 holdings, it effectively diversifies company-specific risk.
WisdomTree International Hedged Quality Dividend Growth Fund 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.
IShares MSCI EAFE ETF (EFA) tracks MSCI EAFE Index and the iShares Core MSCI EAFE ETF (IEFA) tracks MSCI EAFE Investable Market Index. IShares MSCI EAFE ETF has $58.84 B in assets, iShares Core MSCI EAFE ETF has $64.65 B. EFA has an expense ratio of 0.31% and IEFA 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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WisdomTree International Hedged Quality Dividend Growth Fund (IHDG): ETF Research Reports
iShares MSCI EAFE ETF (EFA): ETF Research Reports
iShares Core MSCI EAFE ETF (IEFA): ETF Research Reports
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