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?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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 Flexshares. It has amassed assets over $444.15 million, making it one of the larger ETFs in the World ETFs. This particular fund 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for IQDF are 0.47%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 6.50%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Royal Bank Of Canada Common Stock Cad 0 (RY) accounts for about 3.05% of total assets, followed by Roche Holding Ag Common Stock Chf 0 (ROG) and Nestle Sa Common Stock Chf 0.1 (NESN).
The top 10 holdings account for about 18.87% of total assets under management.
Performance and Risk
So far this year, IQDF has lost about -23.16%, and is down about -21.37% in the last one year (as of 09/22/2022). During this past 52-week period, the fund has traded between $18.82 and $26.20.
The fund has a beta of 0.83 and standard deviation of 21.44% for the trailing three-year period, which makes IQDF a medium risk choice in this particular space. With about 299 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 $46.33 million in assets, FlexShares International Quality Dividend Dynamic ETF has $64.85 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
Royal Bank Of Canada (RY) : 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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