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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader 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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
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 managed by Wisdomtree. IHDG has been able to amass assets over $468.25 M, making it one of the average sized ETFs in the Broad Developed World ETFs. Before fees and expenses, IHDG 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.
Annual operating expenses for IHDG are 0.58%, which makes it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 0.21%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Novo Nordisk A/s (NOVOB) accounts for about 6.95% of total assets, followed by Diageo Plc (DGE) and British American Tobacco Plc (BATS).
The top 10 holdings account for about 34.47% of total assets under management.
Performance and Risk
Year-to-date, the WisdomTree International Hedged Quality Dividend Growth Fund has lost about -5.98% so far, and is down about -5.78% over the last 12 months (as of 11/27/2018). IHDG has traded between $28.80 and $33.03 in this past 52-week period.
The ETF has a beta of 0.72 and standard deviation of 13.01% for the trailing three-year period, making it a medium risk choice in the space. With about 269 holdings, it effectively diversifies company-specific risk.
WisdomTree International Hedged Quality Dividend Growth Fund 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.
IShares Core MSCI EAFE ETF (IEFA) tracks MSCI EAFE Investable Market Index and the iShares MSCI EAFE ETF (EFA) tracks MSCI EAFE Index. IShares Core MSCI EAFE ETF has $55.02 B in assets, iShares MSCI EAFE ETF has $64.51 B. IEFA has an expense ratio of 0.08% and EFA charges 0.32%.
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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WISTR-INT HDG (IHDG): ETF Research Reports
EMG MKT FREE AS (EFA): ETF Research Reports
ISHARS-CR MS EA (IEFA): ETF Research Reports
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