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Is SPDR MSCI EAFE StrategicFactors ETF (QEFA) a Strong ETF Right Now?
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Making its debut on 06/04/2014, smart beta exchange traded fund SPDR MSCI EAFE StrategicFactors ETF (QEFA - 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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
QEFA is managed by State Street Global Advisors, and this fund has amassed over $783.29 million, which makes it one of the larger ETFs in the Broad Developed World ETFs. Before fees and expenses, this particular fund 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
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 0.30%.
QEFA's 12-month trailing dividend yield is 3.57%.
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.
When you look at individual holdings, Nestle S.a. (NESN-CH) accounts for about 2.67% of the fund's total assets, followed by Roche Holding Ltd (ROG-CH) and Novo Nordisk A/s Class B (NOVO.B-DK).
The top 10 holdings account for about 16.44% of total assets under management.
Performance and Risk
The ETF has lost about -19.63% so far this year and is down about -17.83% in the last one year (as of 06/20/2022). In the past 52-week period, it has traded between $60.72 and $79.35.
QEFA has a beta of 0.73 and standard deviation of 20.79% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 706 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 $44.60 billion in assets, iShares Core MSCI EAFE ETF has $83.48 billion. EFA has an expense ratio of 0.32% 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?
Making its debut on 06/04/2014, smart beta exchange traded fund SPDR MSCI EAFE StrategicFactors ETF (QEFA - 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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
QEFA is managed by State Street Global Advisors, and this fund has amassed over $783.29 million, which makes it one of the larger ETFs in the Broad Developed World ETFs. Before fees and expenses, this particular fund 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
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 0.30%.
QEFA's 12-month trailing dividend yield is 3.57%.
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.
When you look at individual holdings, Nestle S.a. (NESN-CH) accounts for about 2.67% of the fund's total assets, followed by Roche Holding Ltd (ROG-CH) and Novo Nordisk A/s Class B (NOVO.B-DK).
The top 10 holdings account for about 16.44% of total assets under management.
Performance and Risk
The ETF has lost about -19.63% so far this year and is down about -17.83% in the last one year (as of 06/20/2022). In the past 52-week period, it has traded between $60.72 and $79.35.
QEFA has a beta of 0.73 and standard deviation of 20.79% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 706 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 $44.60 billion in assets, iShares Core MSCI EAFE ETF has $83.48 billion. EFA has an expense ratio of 0.32% 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.