Is WisdomTree International Hedged Quality Dividend Growth ETF (IHDG) a Strong ETF Right Now?

The WisdomTree International Hedged Quality Dividend Growth ETF (IHDG) made its debut on 05/07/2014, and is a smart beta exchange traded fund that provides broad exposure to the Broad Developed World ETFs category of the market.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

IHDG is managed by Wisdomtree, and this fund has amassed over $2.35 billion, which makes it one of the larger ETFs in the Broad Developed World ETFs. Before fees and expenses, this particular fund seeks to match the performance of the WisdomTree International Hedged Quality Dividend Growth Index.

The WisdomTree International Hedged Quality Dividend Growth Index is designed to provide exposure to the developed market companies while at the same time neutralizing exposure to fluctuations between the value of foreign currencies and the U.S. dollar.

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.

Operating expenses on an annual basis are 0.58% for IHDG, making it on par with most peer products in the space.

IHDG's 12-month trailing dividend yield is 1.68%.

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.

Looking at individual holdings, Lvmh Moet Hennessy Louis Vuitton Se (MC) accounts for about 4.78% of total assets, followed by Industria De Diseno Textil (ITX) and Novartis Ag (NOVN).

Its top 10 holdings account for approximately 33.43% of IHDG's total assets under management.

Performance and Risk

So far this year, IHDG has added roughly 9.11%, and was up about 21.62% in the last one year (as of 03/27/2024). During this past 52-week period, the fund has traded between $37.18 and $45.89.

The ETF has a beta of 0.73 and standard deviation of 14.18% for the trailing three-year period, making it a medium risk choice in the space. With about 335 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree International Hedged Quality Dividend Growth 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.

IShares Core Dividend Growth ETF (DGRO) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $26.62 billion in assets, Vanguard Dividend Appreciation ETF has $77.72 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.

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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WisdomTree International Hedged Quality Dividend Growth ETF (IHDG): ETF Research Reports

Moelis & Company (MC) : Free Stock Analysis Report

Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports

iShares Core Dividend Growth ETF (DGRO): ETF Research Reports

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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