Making its debut on 05/07/2014, smart beta exchange traded fund WisdomTree International Hedged Quality Dividend Growth Fund (IHDG) provides investors broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Wisdomtree. It has amassed assets over $502.01 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
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.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.58%.
IHDG's 12-month trailing dividend yield is 0.19%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Taking into account individual holdings, Novo Nordisk A/s (NOVOB) accounts for about 6.49% of the fund's total assets, followed by British American Tobacco Plc (BATS) and Diageo Plc (DGE).
Its top 10 holdings account for approximately 33.43% of IHDG's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree International Hedged Quality Dividend Growth Fund has added roughly 1.76% so far, and is up about 4.58% over the last 12 months (as of 10/03/2018). IHDG has traded between $29.83 and $33.03 in this past 52-week period.
IHDG has a beta of 0.69 and standard deviation of 12.81% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 270 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 $59.69 B in assets, iShares MSCI EAFE ETF has $70.05 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
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ISHARS-CR MS EA (IEFA): ETF Research Reports
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