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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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.
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
Managed by Wisdomtree, IHDG has amassed assets over $474.39 M, making it one of the average sized ETFs in the Broad Developed World ETFs. Before fees and expenses, this particular fund 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for IHDG are 0.58%, which makes it one of the more expensive products in the space.
IHDG's 12-month trailing dividend yield is 0.20%.
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.
When you look at individual holdings, Novo Nordisk A/s (NOVOB) accounts for about 6.60% of the fund's total assets, followed by British American Tobacco Plc (BATS) and Diageo Plc (DGE).
The top 10 holdings account for about 34.6% of total assets under management.
Performance and Risk
The ETF has lost about -4.75% and is down about -4.64% so far this year and in the past one year (as of 11/02/2018), respectively. IHDG has traded between $29.04 and $33.03 during this last 52-week period.
IHDG has a beta of 0.72 and standard deviation of 12.97% for the trailing three-year period, which makes the fund 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 $55.93 B in assets, iShares MSCI EAFE ETF has $65.06 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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