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Is Invesco S&P International Developed Quality ETF (IDHQ) a Strong ETF Right Now?
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Making its debut on 06/13/2007, smart beta exchange traded fund Invesco S&P International Developed Quality ETF (IDHQ - Free Report) provides investors broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
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.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $339.66 million, making it one of the average sized ETFs in the Broad Developed World ETFs. IDHQ seeks to match the performance of the S&P Quality Developed ex US LargeMidCap Index before fees and expenses.
The S&P Quality Developed ex US LargeMidCap Index tracks the performance of stocks in the S&P Developed Ex-US LargeMidCap Index that have the highest quality score, which is calculated based on three fundamental measures, return on equity, accruals ratio and financial leverage ratio.
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.
Operating expenses on an annual basis are 0.29% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.35%.
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.
Looking at individual holdings, Novartis Ag accounts for about 5.11% of total assets, followed by Nestle Sa (NESN) and Novo Nordisk A/s (NOVOB).
Its top 10 holdings account for approximately 37.07% of IDHQ's total assets under management.
Performance and Risk
The ETF has gained about 6.91% and is up about 12.44% so far this year and in the past one year (as of 08/12/2024), respectively. IDHQ has traded between $25.07 and $31.52 during this last 52-week period.
The fund has a beta of 0.91 and standard deviation of 16.94% for the trailing three-year period, which makes IDHQ a low risk choice in this particular space. With about 216 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P International Developed Quality ETF is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Total International Stock ETF (VXUS - Free Report) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA - Free Report) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $71.92 billion in assets, Vanguard FTSE Developed Markets ETF has $131.71 billion. VXUS has an expense ratio of 0.08% and VEA charges 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed 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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Is Invesco S&P International Developed Quality ETF (IDHQ) a Strong ETF Right Now?
Making its debut on 06/13/2007, smart beta exchange traded fund Invesco S&P International Developed Quality ETF (IDHQ - Free Report) provides investors broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
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.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $339.66 million, making it one of the average sized ETFs in the Broad Developed World ETFs. IDHQ seeks to match the performance of the S&P Quality Developed ex US LargeMidCap Index before fees and expenses.
The S&P Quality Developed ex US LargeMidCap Index tracks the performance of stocks in the S&P Developed Ex-US LargeMidCap Index that have the highest quality score, which is calculated based on three fundamental measures, return on equity, accruals ratio and financial leverage ratio.
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.
Operating expenses on an annual basis are 0.29% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.35%.
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.
Looking at individual holdings, Novartis Ag accounts for about 5.11% of total assets, followed by Nestle Sa (NESN) and Novo Nordisk A/s (NOVOB).
Its top 10 holdings account for approximately 37.07% of IDHQ's total assets under management.
Performance and Risk
The ETF has gained about 6.91% and is up about 12.44% so far this year and in the past one year (as of 08/12/2024), respectively. IDHQ has traded between $25.07 and $31.52 during this last 52-week period.
The fund has a beta of 0.91 and standard deviation of 16.94% for the trailing three-year period, which makes IDHQ a low risk choice in this particular space. With about 216 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P International Developed Quality ETF is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Total International Stock ETF (VXUS - Free Report) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA - Free Report) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $71.92 billion in assets, Vanguard FTSE Developed Markets ETF has $131.71 billion. VXUS has an expense ratio of 0.08% and VEA charges 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed 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.