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Is FlexShares Quality Dividend ETF (QDF) a Strong ETF Right Now?
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Launched on 12/14/2012, the FlexShares Quality Dividend ETF (QDF - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Blend category of the market.
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.
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.
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.
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.
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 sponsored by Flexshares. It has amassed assets over $1.66 billion, making it one of the larger ETFs in the Style Box - All Cap Blend. QDF seeks to match the performance of the Northern Trust Quality Dividend Index before fees and expenses.
The Northern Trust Quality Dividend Index is designed to provide exposure to a high-quality income-oriented portfolio of long-only U.S. equity securities, with an emphasis on long-term capital growth and a targeted overall beta that is similar to that of the Northern Trust 1250 Index and the Index are selected based on expected dividend payment and fundamental factors.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for QDF are 0.37%, which makes it on par with most peer products in the space.
QDF's 12-month trailing dividend yield is 2.19%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For QDF, it has heaviest allocation in the Information Technology sector --about 31.40% of the portfolio --while Financials and Healthcare round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 9.45% of total assets, followed by Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) and Procter &no.38; Gamble Co/the Common Stock Usd 0 (PG - Free Report) .
Its top 10 holdings account for approximately 34.12% of QDF's total assets under management.
Performance and Risk
The ETF return is roughly 19.10% so far this year and is up about 20.04% in the last one year (as of 12/19/2023). In the past 52-week period, it has traded between $51.86 and $61.93.
The fund has a beta of 0.98 and standard deviation of 16.04% for the trailing three-year period, which makes QDF a medium risk choice in this particular space. With about 143 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares Quality Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $48.85 billion in assets, Vanguard Total Stock Market ETF has $344.19 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Blend.
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 FlexShares Quality Dividend ETF (QDF) a Strong ETF Right Now?
Launched on 12/14/2012, the FlexShares Quality Dividend ETF (QDF - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Blend category of the market.
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.
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.
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.
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.
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 sponsored by Flexshares. It has amassed assets over $1.66 billion, making it one of the larger ETFs in the Style Box - All Cap Blend. QDF seeks to match the performance of the Northern Trust Quality Dividend Index before fees and expenses.
The Northern Trust Quality Dividend Index is designed to provide exposure to a high-quality income-oriented portfolio of long-only U.S. equity securities, with an emphasis on long-term capital growth and a targeted overall beta that is similar to that of the Northern Trust 1250 Index and the Index are selected based on expected dividend payment and fundamental factors.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for QDF are 0.37%, which makes it on par with most peer products in the space.
QDF's 12-month trailing dividend yield is 2.19%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For QDF, it has heaviest allocation in the Information Technology sector --about 31.40% of the portfolio --while Financials and Healthcare round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 9.45% of total assets, followed by Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) and Procter &no.38; Gamble Co/the Common Stock Usd 0 (PG - Free Report) .
Its top 10 holdings account for approximately 34.12% of QDF's total assets under management.
Performance and Risk
The ETF return is roughly 19.10% so far this year and is up about 20.04% in the last one year (as of 12/19/2023). In the past 52-week period, it has traded between $51.86 and $61.93.
The fund has a beta of 0.98 and standard deviation of 16.04% for the trailing three-year period, which makes QDF a medium risk choice in this particular space. With about 143 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares Quality Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $48.85 billion in assets, Vanguard Total Stock Market ETF has $344.19 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Blend.
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.