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Is WisdomTree International Hedged Quality Dividend Growth ETF (IHDG) a Strong ETF Right Now?

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Launched on 05/07/2014, the WisdomTree International Hedged Quality Dividend Growth ETF (IHDG - Free Report) is a smart beta exchange traded fund offering broad exposure to the Broad Developed World ETFs 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.

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

The fund is managed by Wisdomtree, and has been able to amass over $1.13 billion, which makes it one of the larger ETFs in the Broad Developed World ETFs. IHDG seeks to match the performance of the WisdomTree International Hedged Quality Dividend Growth Index before fees and expenses.

The WisdomTree International Hedged Quality Dividend Growth Index is designed to provide exposure to the developed market companies while at the same time neutralizing exposure to fluctuations between the value of foreign currencies and the U.S. dollar.

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 IHDG are 0.58%, which makes it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.93%.

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.

When you look at individual holdings, Anglo American Plc (AAL - Free Report) accounts for about 5.24% of the fund's total assets, followed by Lvmh Moet Hennessy Louis Vuitton Se (MC - Free Report) and Bhp Group Ltd (BHP - Free Report) .

IHDG's top 10 holdings account for about 41.17% of its total assets under management.

Performance and Risk

The ETF has lost about -6.44% and is up roughly 6.77% so far this year and in the past one year (as of 02/17/2022), respectively. IHDG has traded between $39.85 and $46.44 during this last 52-week period.

IHDG has a beta of 0.71 and standard deviation of 19.15% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 320 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree International Hedged Quality Dividend Growth 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 Core Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG - Free Report) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $23.02 billion in assets, Vanguard Dividend Appreciation ETF has $64.96 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.

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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