Designed to provide broad exposure to the Broad Developed World ETFs category of the market, the iShares Edge MSCI Multifactor Intl ETF (INTF) is a smart beta exchange traded fund launched on 04/28/2015.
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.
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.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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
The fund is managed by Blackrock, and has been able to amass over $1.01 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
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.
Operating expenses on an annual basis are 0.30% for this ETF, which makes it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 3.49%.
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, Amadeus It Group Sa (AMS) accounts for about 2.29% of the fund's total assets, followed by Axa Sa (CS) and Hitachi Ltd.
Its top 10 holdings account for approximately 17.88% of INTF's total assets under management.
Performance and Risk
The ETF has lost about -11.18% so far this year and is down about -8.40% in the last one year (as of 11/28/2018). In the past 52-week period, it has traded between $24.85 and $31.08.
The fund has a beta of 0.97 and standard deviation of 14.13% for the trailing three-year period, which makes INTF a medium risk choice in this particular space. With about 238 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 $21.49 B in assets, Vanguard FTSE Developed Markets ETF has $65.87 B. VEU has an expense ratio of 0.11% 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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ISHARS-FS INTRN (INTF): ETF Research Reports
Credit Suisse Group (CS) : Free Stock Analysis Report
VANGD-FTSE DV M (VEA): ETF Research Reports
VANGD-FTSE AWLD (VEU): ETF Research Reports
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