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Is SPDR MSCI EAFE StrategicFactors ETF (QEFA) a Strong ETF Right Now?
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A smart beta exchange traded fund, the SPDR MSCI EAFE StrategicFactors ETF (QEFA - Free Report) debuted on 06/04/2014, and offers broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of 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
QEFA is managed by State Street Global Advisors, and this fund has amassed over $799.25 million, which makes it one of the average sized ETFs in the Broad Developed World ETFs. 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for QEFA are 0.30%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.39%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Taking into account individual holdings, Nestle S.a. (NESN-CH) accounts for about 2.68% of the fund's total assets, followed by Roche Holding Ltd Dividend Right Cert. (ROG-CH) and Novo Nordisk A/s Class B (NOVO.B-DK).
QEFA's top 10 holdings account for about 17.68% of its total assets under management.
Performance and Risk
Year-to-date, the SPDR MSCI EAFE StrategicFactors ETF has lost about -15.46% so far, and is down about -14.23% over the last 12 months (as of 08/22/2022). QEFA has traded between $60.35 and $79.35 in this past 52-week period.
QEFA has a beta of 0.73 and standard deviation of 20.97% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 712 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 $46.27 billion in assets, iShares Core MSCI EAFE ETF has $87.63 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?
A smart beta exchange traded fund, the SPDR MSCI EAFE StrategicFactors ETF (QEFA - Free Report) debuted on 06/04/2014, and offers broad exposure to the Broad Developed World ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of 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
QEFA is managed by State Street Global Advisors, and this fund has amassed over $799.25 million, which makes it one of the average sized ETFs in the Broad Developed World ETFs. 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for QEFA are 0.30%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.39%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Taking into account individual holdings, Nestle S.a. (NESN-CH) accounts for about 2.68% of the fund's total assets, followed by Roche Holding Ltd Dividend Right Cert. (ROG-CH) and Novo Nordisk A/s Class B (NOVO.B-DK).
QEFA's top 10 holdings account for about 17.68% of its total assets under management.
Performance and Risk
Year-to-date, the SPDR MSCI EAFE StrategicFactors ETF has lost about -15.46% so far, and is down about -14.23% over the last 12 months (as of 08/22/2022). QEFA has traded between $60.35 and $79.35 in this past 52-week period.
QEFA has a beta of 0.73 and standard deviation of 20.97% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 712 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 $46.27 billion in assets, iShares Core MSCI EAFE ETF has $87.63 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.