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Is FlexShares Quality Dividend ETF (QDF) a Strong ETF Right Now?
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A smart beta exchange traded fund, the FlexShares Quality Dividend ETF (QDF - Free Report) debuted on 12/14/2012, and offers broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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 Flexshares. QDF has been able to amass assets over $1.88 billion, making it one of the larger ETFs in the Style Box - All Cap Blend. Before fees and expenses, QDF seeks to match the performance of the Northern Trust Quality Dividend Index.
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
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 QDF are 0.37%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.86%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 29.50% of the portfolio. Financials and Industrials round out the top three.
When you look at individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) accounts for about 8.54% of the fund's total assets, followed by Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) and Nvidia Corp Common Stock Usd 0.001 (NVDA - Free Report) .
QDF's top 10 holdings account for about 37.26% of its total assets under management.
Performance and Risk
Year-to-date, the FlexShares Quality Dividend ETF has added roughly 18.04% so far, and was up about 36.55% over the last 12 months (as of 10/30/2024). QDF has traded between $54.39 and $72.61 in this past 52-week period.
The ETF has a beta of 0.97 and standard deviation of 15.81% for the trailing three-year period, making it a medium risk choice in the space. With about 133 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 $62.84 billion in assets, Vanguard Total Stock Market ETF has $446.94 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?
A smart beta exchange traded fund, the FlexShares Quality Dividend ETF (QDF - Free Report) debuted on 12/14/2012, and offers broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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 Flexshares. QDF has been able to amass assets over $1.88 billion, making it one of the larger ETFs in the Style Box - All Cap Blend. Before fees and expenses, QDF seeks to match the performance of the Northern Trust Quality Dividend Index.
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
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 QDF are 0.37%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.86%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 29.50% of the portfolio. Financials and Industrials round out the top three.
When you look at individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) accounts for about 8.54% of the fund's total assets, followed by Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) and Nvidia Corp Common Stock Usd 0.001 (NVDA - Free Report) .
QDF's top 10 holdings account for about 37.26% of its total assets under management.
Performance and Risk
Year-to-date, the FlexShares Quality Dividend ETF has added roughly 18.04% so far, and was up about 36.55% over the last 12 months (as of 10/30/2024). QDF has traded between $54.39 and $72.61 in this past 52-week period.
The ETF has a beta of 0.97 and standard deviation of 15.81% for the trailing three-year period, making it a medium risk choice in the space. With about 133 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 $62.84 billion in assets, Vanguard Total Stock Market ETF has $446.94 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.