Designed to provide broad exposure to the World ETFs category of the market, the FlexShares International Quality Dividend ETF (IQDF) is a smart beta exchange traded fund launched on 04/12/2013.
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.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
The fund is sponsored by Flexshares. It has amassed assets over $572.91 million, making it one of the larger ETFs in the World ETFs. This particular fund, before fees and expenses, 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.
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 IQDF are 0.47%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 6.66%.
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.
Taking into account individual holdings, Taiwan Semiconductor Manufacturing Co Ltd Common accounts for about 2.69% of the fund's total assets, followed by Bhp Group Ltd Common Stock Aud 0 (BHP) and Novartis Ag Common Stock Chf 0.49 (NOVN).
Its top 10 holdings account for approximately 16.12% of IQDF's total assets under management.
The ETF has gained about 0.82% and is up about 10% so far this year and in the past one year (as of 01/17/2025), respectively. IQDF has traded between $22.63 and $26.57 during this last 52-week period.
IQDF has a beta of 0.84 and standard deviation of 15.53% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 273 holdings, it effectively diversifies company-specific risk.
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 $18.56 million in assets, FlexShares International Quality Dividend Dynamic ETF has $58.70 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.
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
FlexShares International Quality Dividend Dynamic ETF (IQDY): ETF Research Reports
FlexShares International Quality Dividend Defensive ETF (IQDE): ETF Research Reports
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