The FlexShares International Quality Dividend ETF (IQDF) was launched on 04/12/2013, and is a smart beta exchange traded fund designed to offer broad exposure to the 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option 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.

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

IQDF is managed by Flexshares, and this fund has amassed over $595.49 million, which makes 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

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.

Annual operating expenses for this ETF are 0.47%, making it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 5.16%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Taking into account individual holdings, Novo Nordisk A/s Common Stock Dkk 0.1 (NOVOb.CO) accounts for about 3.05% of the fund's total assets, followed by Royal Bank Of Canada Common Stock Cad 0 (RY) and Bhp Group Ltd Common Stock Aud 0 (BHP).

IQDF's top 10 holdings account for about 20.43% of its total assets under management.

Performance and Risk

So far this year, IQDF has added roughly 10.58%, and is up about 21.17% in the last one year (as of 09/13/2024). During this past 52-week period, the fund has traded between $20.56 and $25.94.

IQDF has a beta of 0.85 and standard deviation of 15.43% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 261 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 $22.42 million in assets, FlexShares International Quality Dividend Dynamic ETF has $67.91 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

To read this article on Zacks.com click here.

Zacks Investment Research