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Is FlexShares Quality Dividend Defensive ETF (QDEF) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - All Cap Blend category of the market, the FlexShares Quality Dividend Defensive ETF (QDEF - Free Report) is a smart beta exchange traded fund launched on 12/14/2012.
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.
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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Flexshares. QDEF has been able to amass assets over $349.83 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. QDEF, 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.37%.
It's 12-month trailing dividend yield comes in at 2.11%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
QDEF's heaviest allocation is in the Information Technology sector, which is about 28.40% of the portfolio. Its Healthcare and Financials round out the top three.
When you look at individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) accounts for about 6.49% of the fund's total assets, followed by Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) and Broadcom Inc Common Stock Usd (AVGO - Free Report) .
Its top 10 holdings account for approximately 37.59% of QDEF's total assets under management.
Performance and Risk
The ETF has added about 4.29% so far this year and was up about 16.04% in the last one year (as of 05/01/2024). In the past 52-week period, it has traded between $52.45 and $64.21.
QDEF has a beta of 0.90 and standard deviation of 14.48% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 127 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 - 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 $51.93 billion in assets, Vanguard Total Stock Market ETF has $372.58 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 Defensive ETF (QDEF) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - All Cap Blend category of the market, the FlexShares Quality Dividend Defensive ETF (QDEF - Free Report) is a smart beta exchange traded fund launched on 12/14/2012.
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.
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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Flexshares. QDEF has been able to amass assets over $349.83 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. QDEF, 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.37%.
It's 12-month trailing dividend yield comes in at 2.11%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
QDEF's heaviest allocation is in the Information Technology sector, which is about 28.40% of the portfolio. Its Healthcare and Financials round out the top three.
When you look at individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) accounts for about 6.49% of the fund's total assets, followed by Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) and Broadcom Inc Common Stock Usd (AVGO - Free Report) .
Its top 10 holdings account for approximately 37.59% of QDEF's total assets under management.
Performance and Risk
The ETF has added about 4.29% so far this year and was up about 16.04% in the last one year (as of 05/01/2024). In the past 52-week period, it has traded between $52.45 and $64.21.
QDEF has a beta of 0.90 and standard deviation of 14.48% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 127 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 - 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 $51.93 billion in assets, Vanguard Total Stock Market ETF has $372.58 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.