A smart beta exchange traded fund, the FlexShares International Quality Dividend ETF (IQDF) debuted on 04/12/2013, and offers broad exposure to the 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.

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.

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.

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.

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 Flexshares. It has amassed assets over $582.62 million, making it one of the larger ETFs in the World ETFs. Before fees and expenses, this particular fund seeks to match the performance of the Northern Trust International Quality Dividend Index.

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.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.47%.

It has a 12-month trailing dividend yield of 4.85%.

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.

When you look at individual holdings, Royal Bank Of Canada Common Stock Cad 0 (RY) accounts for about 2.88% of the fund's total assets, followed by Bhp Group Ltd Common Stock Aud 0 (BHP) and Novo Nordisk A/s Common Stock Dkk 0.1 (NOVOb.CO).

The top 10 holdings account for about 19.2% of total assets under management.

Performance and Risk

So far this year, IQDF has added roughly 7.84%, and is up about 18.74% in the last one year (as of 11/14/2024). During this past 52-week period, the fund has traded between $22.08 and $26.57.

The ETF has a beta of 0.86 and standard deviation of 15.67% for the trailing three-year period, making it a medium risk choice in the space. With about 270 holdings, it effectively diversifies company-specific risk.

Alternatives

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 $21.64 million in assets, FlexShares International Quality Dividend Dynamic ETF has $66.17 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.

Bottom Line

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

BHP Group Limited Sponsored ADR (BHP) : 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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