The WisdomTree International Hedged Quality Dividend Growth ETF (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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by Wisdomtree. It has amassed assets over $646.02 million, making it one of the larger ETFs in the Broad Developed World ETFs. IHDG, before fees and expenses, 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are 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.
It has a 12-month trailing dividend yield of 2.19%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Looking at individual holdings, Novo Nordisk A/s (NOVOB) accounts for about 4.62% of total assets, followed by British American Tobacco Plc (BATS) and Industria De Diseno Textil (ITX).
IHDG's top 10 holdings account for about 33.07% of its total assets under management.
Performance and Risk
Year-to-date, the WisdomTree International Hedged Quality Dividend Growth ETF has lost about -11.55% so far, and is down about -0.91% over the last 12 months (as of 05/08/2020). IHDG has traded between $26.65 and $37.66 in this past 52-week period.
The ETF has a beta of 0.77 and standard deviation of 18.59% for the trailing three-year period, making it a medium risk choice in the space. With about 232 holdings, it effectively diversifies company-specific risk.
WisdomTree International Hedged Quality Dividend Growth ETF 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 Core Dividend Growth ETF (DGRO) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $9.10 billion in assets, Vanguard Dividend Appreciation ETF has $39.59 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.
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 ETF (IHDG): ETF Research Reports
iShares Core Dividend Growth ETF (DGRO): ETF Research Reports
Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports
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