Is WisdomTree International Hedged Quality Dividend Growth ETF (IHDG) a Strong ETF Right Now?
Designed to provide broad exposure to the Broad Developed World ETFs category of the market, the WisdomTree International Hedged Quality Dividend Growth ETF (IHDG) is a smart beta exchange traded fund launched on 05/07/2014.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
The fund is sponsored by Wisdomtree. It has amassed assets over $789.36 million, making it one of the larger ETFs in the Broad Developed World ETFs. IHDG seeks to match the performance of the WisdomTree International Hedged Quality Dividend Growth Index before fees and expenses.
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.
Annual operating expenses for this ETF are 0.58%, making it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.71%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
When you look at individual holdings, Novo Nordisk A/s (NOVOB) accounts for about 4.59% of the fund's total assets, followed by Unilever Nv (UNA) and Industria De Diseno Textil (ITX).
Its top 10 holdings account for approximately 34.27% of IHDG's total assets under management.
Performance and Risk
The ETF has lost about -0.52% so far this year and was up about 9.95% in the last one year (as of 07/17/2020). In the past 52-week period, it has traded between $26.65 and $37.66.
IHDG has a beta of 0.77 and standard deviation of 18.95% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 230 holdings, it effectively diversifies company-specific risk.
WisdomTree International Hedged Quality Dividend Growth ETF is not a suitable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. Instead, there are other ETFs in the space which investors should 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 $10.99 billion in assets, Vanguard Dividend Appreciation ETF has $44.31 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.
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
iShares Core Dividend Growth ETF (DGRO): ETF Research Reports
Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.