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Is FlexShares Quality Dividend Defensive ETF (QDEF) a Strong ETF Right Now?

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A smart beta exchange traded fund, the FlexShares Quality Dividend Defensive ETF (QDEF - 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.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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

QDEF is managed by Flexshares, and this fund has amassed over $492.21 million, which makes it one of the average sized ETFs in the Style Box - All Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the Northern Trust Quality Dividend Defensive Index.

The Northern Trust Quality Dividend Defensive 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 generally between 0.5 to 1.0 times that of the Northern Trust 1250 Index that are selected based on expected dividend payment and fundamental factors.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for QDEF are 0.37%, which makes it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 1.75%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

QDEF's heaviest allocation is in the Information Technology sector, which is about 30.3% of the portfolio. Its Financials and Healthcare round out the top three.

Taking into account individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL) accounts for about 7.93% of the fund's total assets, followed by Nvidia Corp Common Stock Usd 0.001 (NVDA) and Broadcom Inc Common Stock Usd (AVGO).

The top 10 holdings account for about 38.76% of total assets under management.

Performance and Risk

So far this year, QDEF has lost about -0.36%, and is up roughly 15.35% in the last one year (as of 01/21/2026). During this past 52-week period, the fund has traded between $62.50 and $82.40.

QDEF has a beta of 0.85 and standard deviation of 11.89% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 132 holdings, it effectively diversifies company-specific risk .

Alternatives

FlexShares Quality Dividend Defensive 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) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI) tracks CRSP US Total Market Index. iShares Core S&P Total U.S. Stock Market ETF has $80.52 billion in assets, Vanguard Total Stock Market ETF has $570.25 billion. ITOT has an expense ratio of 0.03% and VTI changes 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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