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The FlexShares International Quality Dividend ETF (IQDF) made its debut on 04/12/2013, and is a smart beta exchange traded fund that provides broad exposure to the World ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

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.

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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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 $597.94 million, making it one of the larger ETFs in the World ETFs. Before fees and expenses, IQDF 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

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.

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

It's 12-month trailing dividend yield comes in at 5.14%.

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.

Looking at individual holdings, Novo Nordisk A/s Common Stock Dkk 0.1 (NOVOb.CO) accounts for about 2.91% of total assets, followed by Bhp Group Ltd Common Stock Aud 0 (BHP) and Royal Bank Of Canada Common Stock Cad 0 (RY).

Its top 10 holdings account for approximately 19.78% of IQDF's total assets under management.

Performance and Risk

So far this year, IQDF has gained about 10.93%, and was up about 21.45% in the last one year (as of 07/12/2024). During this past 52-week period, the fund has traded between $20.56 and $25.68.

The ETF has a beta of 0.85 and standard deviation of 15.15% for the trailing three-year period, making it a medium risk choice in the space. With about 284 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 $22.17 million in assets, FlexShares International Quality Dividend Dynamic ETF has $69.52 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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.