The WisdomTree International Hedged Quality Dividend Growth Fund (IHDG) made its debut on 05/07/2014, and is a smart beta exchange traded fund that provides broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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 $432.27 M, making it one of the average sized ETFs in the Broad Developed World ETFs. Before fees and expenses, this particular fund 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.58% for this ETF, which makes it one of the more expensive products in the space.
IHDG's 12-month trailing dividend yield is 0.35%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Looking at individual holdings, Novo Nordisk A/s (NOVOB) accounts for about 6.84% of total assets, followed by Diageo Plc (DGE) and British American Tobacco Plc (BATS).
Its top 10 holdings account for approximately 35.61% of IHDG's total assets under management.
Performance and Risk
The ETF return is roughly 14.89% so far this year and is down about -0.77% in the last one year (as of 05/31/2019). In the past 52-week period, it has traded between $26.92 and $33.29.
The ETF has a beta of 0.76 and standard deviation of 12.08% for the trailing three-year period, making it a medium risk choice in the space. With about 265 holdings, it effectively diversifies company-specific risk.
WisdomTree International Hedged Quality Dividend Growth Fund 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 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 $60.84 B in assets, iShares Core MSCI EAFE ETF has $62.84 B. EFA has an expense ratio of 0.31% and IEFA charges 0.08%.
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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