There is no shortage of dividend
currently on the market, but the statistics indicate there may
room for more. Investors poured
$6.1 billion in new assets
into U.S. dividend-themed ETFs during the first quarter.
At the end of the quarter, $68.5 billion in assets resided in
dividend ETFs, according to S&P Capital IQ.
Numbers like those indicate investors love dividend ETFs and,
in some cases, will quickly warm to new dividend funds. Income
investors now have a few more dividend ETFs with global focuses
to pick from, including the FlexShares International Quality
Dividend Index Fund (
), which debuted Tuesday.
The FlexShares International Quality Dividend Index Fund is
part of a suite of three new dividend funds introduced by
Northern Trust's (NASDAQ:
) on Tuesday. FlexShares has previously had success with
other dividend offerings
including the FlexShares Quality Dividend Index Fund (NYSE:
QDF, a U.S. focused equivalent of the new IQDF, debuted in
mid-December and now has more than $53.4 million in assets under
With a net expense ratio of 0.47 percent per year, IQDF tracks
the Northern Trust International Large Cap Index. The new ETF's
aims to match the index's beta will improving upon its dividend
according to FlexShares
Home to 216 holdings, IQDF allocates nearly 28 percent of its
weight to the financial services sector. Energy, industrials and
consumer staples also receive double-digit allocation. Familiar
dividend sectors such as health care, telecommunications and
utilities are not excessively weighted in the new ETF as that
trio combines for about 20.5 percent of the fund's weight.
IQDF is predominantly a large-cap fund though it does a decent
job of spreading its weight across various market
capitalizations. Large-caps account for almost 54.2 percent while
mid-caps check in at 33.2 percent. Small and micro-caps combine
for the remainder of IQDF's weight.
At the country level, IQDF is dominated by the U.K. (16.5
percent) and Japan (11.7 percent). Australia, France and Canada
round out the ETF's top-five country weights. There is some
emerging markets exposure with China and Brazil combing for about
7.5 percent of the new ETF's weight. Nearly 27.7 percent of
IQDF's country weight is defined as "others" though data is not
yet available on what those other countries.
Top holdings include Commonwealth Bank of Australia, which is
also the top holding in the iShares Dow Jones International
Select Dividend Index Fund (NYSE:
), a potential rival for IQDF. Another possible rival for IQDF is
the PowerShares International Dividend Achiever Portfolio (NYSE:
Other familiar names in the new ETF's lineup include Total
), GlaxoSmithKline (NYSE:
) and Royal Dutch Shell (NYSE: RDS-A).
Important to investors is the fact that IQDF employs a
screening process that focuses on "three main factors including
management efficiency and dividend policy; profitability; and
cash flow to sustain dividend payments," said the issuer. That
means the ETF does not use length of dividend increase as its
primary screening methodology, a strategy currently employed by
some of the largest dividend ETFs on the market.
FlexShares is no stranger to unique screening methodologies
for its dividend ETFs. The FlexShares Quality Dividend Defensive
Index Fund (NYSE:
), which debuted in December,
uses its own proprietary scoring model and an
. That ETF has returned more than 11 percent since its
After just one day, it is too early to pass judgment on IQDF,
particularly because yield information is not yet available.
However, it would be wise not to underestimate IQDF's potential
for success. The ETF has come to market in favorable environment
for dividend investors and it cannot be ignored that FlexShares
only needed 10 ETFs, none of which are yet two years old to amass
nearly $4.7 billion in assets under management.
For more on ETFs, click
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