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Is FlexShares Quality Dividend ETF (QDF) a Strong ETF Right Now?
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A smart beta exchange traded fund, the FlexShares Quality Dividend ETF (QDF - Free Report) debuted on 12/14/2012, and offers broad exposure to the Style Box - All Cap Blend 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Because the fund has amassed over $1.68 billion, this makes it one of the larger ETFs in the Style Box - All Cap Blend. QDF is managed by Flexshares. Before fees and expenses, this particular fund seeks to match the performance of the Northern Trust Quality Dividend Index.
The Northern Trust Quality Dividend 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 similar to that of the Northern Trust 1250 Index and the Index 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 QDF are 0.37%, which makes it on par with most peer products in the space.
QDF's 12-month trailing dividend yield is 2.10%.
Sector Exposure and Top Holdings
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.
For QDF, it has heaviest allocation in the Information Technology sector --about 30.50% of the portfolio --while Financials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) accounts for about 7.46% of the fund's total assets, followed by Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) and Broadcom Inc Common Stock Usd (AVGO - Free Report) .
Its top 10 holdings account for approximately 36.77% of QDF's total assets under management.
Performance and Risk
The ETF has added about 3.06% and is up roughly 17.78% so far this year and in the past one year (as of 04/24/2024), respectively. QDF has traded between $53.52 and $65.91 during this last 52-week period.
The ETF has a beta of 0.98 and standard deviation of 15.83% for the trailing three-year period, making it a medium risk choice in the space. With about 134 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares Quality Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
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 $52.34 billion in assets, Vanguard Total Stock Market ETF has $375.54 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 ETF (QDF) a Strong ETF Right Now?
A smart beta exchange traded fund, the FlexShares Quality Dividend ETF (QDF - Free Report) debuted on 12/14/2012, and offers broad exposure to the Style Box - All Cap Blend 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Because the fund has amassed over $1.68 billion, this makes it one of the larger ETFs in the Style Box - All Cap Blend. QDF is managed by Flexshares. Before fees and expenses, this particular fund seeks to match the performance of the Northern Trust Quality Dividend Index.
The Northern Trust Quality Dividend 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 similar to that of the Northern Trust 1250 Index and the Index 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 QDF are 0.37%, which makes it on par with most peer products in the space.
QDF's 12-month trailing dividend yield is 2.10%.
Sector Exposure and Top Holdings
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.
For QDF, it has heaviest allocation in the Information Technology sector --about 30.50% of the portfolio --while Financials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) accounts for about 7.46% of the fund's total assets, followed by Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) and Broadcom Inc Common Stock Usd (AVGO - Free Report) .
Its top 10 holdings account for approximately 36.77% of QDF's total assets under management.
Performance and Risk
The ETF has added about 3.06% and is up roughly 17.78% so far this year and in the past one year (as of 04/24/2024), respectively. QDF has traded between $53.52 and $65.91 during this last 52-week period.
The ETF has a beta of 0.98 and standard deviation of 15.83% for the trailing three-year period, making it a medium risk choice in the space. With about 134 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares Quality Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
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 $52.34 billion in assets, Vanguard Total Stock Market ETF has $375.54 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.