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Is FlexShares Quality Dividend Defensive ETF (QDEF) a Strong ETF Right Now?
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Launched on 12/14/2012, the FlexShares Quality Dividend Defensive ETF (QDEF - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Blend 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
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.
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 Flexshares, QDEF has amassed assets over $343.36 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. Before fees and expenses, QDEF seeks to match the performance of the Northern Trust Quality Dividend Defensive Index.
The Northern Trust Quality Dividend Defensive Index is designed to provide exposure to a high-quality income-oriented portfolio of long-only U.S. equity securities, with an emphasis on long-term capital growth and a targeted overall beta that is generally between 0.5 to 1.0 times that of the Northern Trust 1250 Index that are selected based on expected dividend payment and fundamental factors.
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 this ETF are 0.37%, making it on par with most peer products in the space.
QDEF's 12-month trailing dividend yield is 2.21%.
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.
Representing 25.20% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Financials round out the top three.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 8.02% of the fund's total assets, followed by Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) and Procter &no.38; Gamble Co/the Common Stock Usd 0 (PG - Free Report) .
The top 10 holdings account for about 35.52% of total assets under management.
Performance and Risk
So far this year, QDEF has added roughly 17.48%, and was up about 18.52% in the last one year (as of 12/29/2023). During this past 52-week period, the fund has traded between $50.33 and $59.34.
QDEF has a beta of 0.90 and standard deviation of 14.76% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 131 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares Quality Dividend Defensive ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $49.52 billion in assets, Vanguard Total Stock Market ETF has $346.81 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Blend.
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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Is FlexShares Quality Dividend Defensive ETF (QDEF) a Strong ETF Right Now?
Launched on 12/14/2012, the FlexShares Quality Dividend Defensive ETF (QDEF - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Blend 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
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.
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 Flexshares, QDEF has amassed assets over $343.36 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. Before fees and expenses, QDEF seeks to match the performance of the Northern Trust Quality Dividend Defensive Index.
The Northern Trust Quality Dividend Defensive Index is designed to provide exposure to a high-quality income-oriented portfolio of long-only U.S. equity securities, with an emphasis on long-term capital growth and a targeted overall beta that is generally between 0.5 to 1.0 times that of the Northern Trust 1250 Index that are selected based on expected dividend payment and fundamental factors.
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 this ETF are 0.37%, making it on par with most peer products in the space.
QDEF's 12-month trailing dividend yield is 2.21%.
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.
Representing 25.20% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Financials round out the top three.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 8.02% of the fund's total assets, followed by Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) and Procter &no.38; Gamble Co/the Common Stock Usd 0 (PG - Free Report) .
The top 10 holdings account for about 35.52% of total assets under management.
Performance and Risk
So far this year, QDEF has added roughly 17.48%, and was up about 18.52% in the last one year (as of 12/29/2023). During this past 52-week period, the fund has traded between $50.33 and $59.34.
QDEF has a beta of 0.90 and standard deviation of 14.76% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 131 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares Quality Dividend Defensive ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $49.52 billion in assets, Vanguard Total Stock Market ETF has $346.81 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Blend.
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.