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The FlexShares International Quality Dividend ETF (IQDF) was launched on 04/12/2013, and is a smart beta exchange traded fund designed to offer broad exposure to the 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 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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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
Because the fund has amassed over $549.38 million, this makes it one of the larger ETFs in the World ETFs. IQDF is managed by Flexshares. IQDF seeks to match the performance of the Northern Trust International Quality Dividend Index before fees and expenses.
The Northern Trust International Quality Dividend Index is designed to provide exposure to a high-quality income-oriented portfolio of long-only international securities issued by non-U.S.-based companies, with an emphasis on long-term capital growth and a targeted overall beta that is similar to that of the Northern Trust International Large Cap Index.
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 0.47% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 4.98%.
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.
Looking at individual holdings, Roche Holding Ag Common Stock Chf 0 (ROG) accounts for about 2.32% of total assets, followed by L'oreal Sa Common Stock Eur 0.2 (OR) and Nestle Sa Common Stock Chf 0.1 (NESN).
The top 10 holdings account for about 17.76% of total assets under management.
Performance and Risk
The ETF has lost about -14.01% so far this year and is down about -13.63% in the last one year (as of 05/17/2022). In the past 52-week period, it has traded between $21.43 and $27.61.
The ETF has a beta of 0.84 and standard deviation of 20.80% for the trailing three-year period, making it a medium risk choice in the space. With about 305 holdings, it effectively diversifies company-specific risk.
FlexShares International Quality Dividend ETF is a reasonable option for investors seeking to outperform the World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
FlexShares International Quality Dividend Defensive ETF (IQDE) tracks Northern Trust International Quality Dividend Defensive Index and the FlexShares International Quality Dividend Dynamic ETF (IQDY) tracks Northern Trust International Quality Dividend Dynamic Index. FlexShares International Quality Dividend Defensive ETF has $60.44 million in assets, FlexShares International Quality Dividend Dynamic ETF has $75.52 million. IQDE has an expense ratio of 0.47% and IQDY charges 0.47%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the 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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FlexShares International Quality Dividend ETF (IQDF): ETF Research Reports
Rogers Corporation (ROG) : Free Stock Analysis Report
Osisko Gold Royalties Ltd (OR) : Free Stock Analysis Report
FlexShares International Quality Dividend Dynamic ETF (IQDY): ETF Research Reports
FlexShares International Quality Dividend Defensive ETF (IQDE): ETF Research Reports
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