Is iShares International Equity Factor ETF (INTF) a Strong ETF Right Now?
Launched on 04/28/2015, the iShares International Equity Factor ETF (INTF) 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?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
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 sponsored by Blackrock. It has amassed assets over $1.04 billion, making it one of the average sized ETFs in the Broad Developed World ETFs. This particular fund seeks to match the performance of the MSCI World ex USA Diversified Multi-Factor Index before fees and expenses.
The STOXX International Equity Factor Index composes of global developed market large and mid-capitalization stocks, excluding the US, that have favourable exposure to target style factors subject to constraints.
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.
Operating expenses on an annual basis are 0.15% for this ETF, which makes it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.48%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Novo Nordisk Class B (NOVO) accounts for about 2.70% of the fund's total assets, followed by Asml Holding Nv (ASML) and Nestle Sa (NESN).
Its top 10 holdings account for approximately 13.51% of INTF's total assets under management.
Performance and Risk
The ETF return is roughly 3.21% and was up about 10.30% so far this year and in the past one year (as of 04/16/2024), respectively. INTF has traded between $24.65 and $29.88 during this last 52-week period.
The fund has a beta of 0.88 and standard deviation of 16.10% for the trailing three-year period, which makes INTF a medium risk choice in this particular space. With about 468 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares International Equity Factor 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.
Vanguard Total International Stock ETF (VXUS) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $66.97 billion in assets, Vanguard FTSE Developed Markets ETF has $126.94 billion. VXUS has an expense ratio of 0.07% and VEA charges 0.05%.
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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iShares International Equity Factor ETF (INTF): ETF Research Reports
ASML Holding N.V. (ASML) : Free Stock Analysis Report
Vanguard FTSE Developed Markets ETF (VEA): ETF Research Reports
Vanguard Total International Stock ETF (VXUS): ETF Research Reports
