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Is SPDR MSCI EAFE StrategicFactors ETF (QEFA) a Strong ETF Right Now?
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Designed to provide broad exposure to the Broad Developed World ETFs category of the market, the SPDR MSCI EAFE StrategicFactors ETF (QEFA - Free Report) is a smart beta exchange traded fund launched on 06/04/2014.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $972.95 million, this makes it one of the average sized ETFs in the Broad Developed World ETFs. QEFA is managed by State Street Global Advisors. Before fees and expenses, QEFA seeks to match the performance of the MSCI EAFE Factor Mix A-Series Index.
The MSCI EAFE Factor Mix A-Series Index captures large and mid-cap representation across 22 developed market Europe, Australasia, and Far East countries and aims to represent the performance of value, low volatility, and quality factor strategies.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.30% for QEFA, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.72%.
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.
Looking at individual holdings, Nestle Sa Reg (NESN) accounts for about 2.22% of total assets, followed by Novo Nordisk A/s B (NOVOB) and Roche Holding Ag Genusschein (ROG - Free Report) .
The top 10 holdings account for about 16.76% of total assets under management.
Performance and Risk
The ETF has gained about 10.99% so far this year and is up about 18.14% in the last one year (as of 09/17/2024). In the past 52-week period, it has traded between $64.42 and $80.24.
QEFA has a beta of 0.80 and standard deviation of 15.28% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 689 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR MSCI EAFE StrategicFactors 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.
IShares MSCI EAFE ETF (EFA - Free Report) tracks MSCI EAFE Index and the iShares Core MSCI EAFE ETF (IEFA - Free Report) tracks MSCI EAFE Investable Market Index. IShares MSCI EAFE ETF has $57.27 billion in assets, iShares Core MSCI EAFE ETF has $123.10 billion. EFA has an expense ratio of 0.33% and IEFA charges 0.07%.
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 SPDR MSCI EAFE StrategicFactors ETF (QEFA) a Strong ETF Right Now?
Designed to provide broad exposure to the Broad Developed World ETFs category of the market, the SPDR MSCI EAFE StrategicFactors ETF (QEFA - Free Report) is a smart beta exchange traded fund launched on 06/04/2014.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $972.95 million, this makes it one of the average sized ETFs in the Broad Developed World ETFs. QEFA is managed by State Street Global Advisors. Before fees and expenses, QEFA seeks to match the performance of the MSCI EAFE Factor Mix A-Series Index.
The MSCI EAFE Factor Mix A-Series Index captures large and mid-cap representation across 22 developed market Europe, Australasia, and Far East countries and aims to represent the performance of value, low volatility, and quality factor strategies.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.30% for QEFA, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.72%.
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.
Looking at individual holdings, Nestle Sa Reg (NESN) accounts for about 2.22% of total assets, followed by Novo Nordisk A/s B (NOVOB) and Roche Holding Ag Genusschein (ROG - Free Report) .
The top 10 holdings account for about 16.76% of total assets under management.
Performance and Risk
The ETF has gained about 10.99% so far this year and is up about 18.14% in the last one year (as of 09/17/2024). In the past 52-week period, it has traded between $64.42 and $80.24.
QEFA has a beta of 0.80 and standard deviation of 15.28% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 689 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR MSCI EAFE StrategicFactors 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.
IShares MSCI EAFE ETF (EFA - Free Report) tracks MSCI EAFE Index and the iShares Core MSCI EAFE ETF (IEFA - Free Report) tracks MSCI EAFE Investable Market Index. IShares MSCI EAFE ETF has $57.27 billion in assets, iShares Core MSCI EAFE ETF has $123.10 billion. EFA has an expense ratio of 0.33% and IEFA charges 0.07%.
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.