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Is Vident International Equity Strategy ETF (VIDI) a Strong ETF Right Now?

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Designed to provide broad exposure to the World ETFs category of the market, the Vident International Equity Strategy ETF (VIDI - Free Report) is a smart beta exchange traded fund launched on 10/29/2013.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.

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

The fund is managed by Vident Financial, and has been able to amass over $366.14 million, which makes it one of the average sized ETFs in the World ETFs. Before fees and expenses, VIDI seeks to match the performance of the Vident International Equity Index.

The Vident Core International Equity Index is an international equity index that combines principles-based country and securities selection with sophisticated risk management. The index balances risk across developed and emerging economies and emphasizes those with favorable conditions for growth.

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 this ETF are 0.61%, making it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 5.26%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Taking into account individual holdings, Cash & Other (Cash&Other) accounts for about 1.09% of the fund's total assets, followed by Lenovo Group Ltd and Wistron Corp.

The top 10 holdings account for about 5.63% of total assets under management.

Performance and Risk

The ETF has gained about 8.31% so far this year and was up about 2.22% in the last one year (as of 06/13/2023). In the past 52-week period, it has traded between $19.23 and $23.53.

VIDI has a beta of 0.93 and standard deviation of 16.82% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 248 holdings, it effectively diversifies company-specific risk.

Alternatives

Vident International Equity Strategy ETF is not a suitable option for investors seeking to outperform the World ETFs segment of the market. Instead, there are other ETFs in the space which investors should 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 $56.90 billion in assets, Vanguard FTSE Developed Markets ETF has $112.97 billion. VXUS has an expense ratio of 0.07% and VEA charges 0.05%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the 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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