Technology

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

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

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

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.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

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.

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

Because the fund has amassed over $796.28 million, this makes it one of the larger ETFs in the Broad Developed World ETFs. IHDG is managed by Wisdomtree. 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.

Operating expenses on an annual basis are 0.58% for this ETF, which makes it one of the more expensive products in the space.

It's 12-month trailing dividend yield comes in at 2.10%.

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, Novo Nordisk A/s (NOVOB) accounts for about 4.31% of total assets, followed by Unilever Nv (UNA) and Industria De Diseno Textil (ITX).

IHDG's top 10 holdings account for about 34.33% of its total assets under management.

Performance and Risk

So far this year, IHDG has added roughly 0.80%, and is up about 10.46% in the last one year (as of 09/23/2020). During this past 52-week period, the fund has traded between $26.65 and $37.66.

The fund has a beta of 0.71 and standard deviation of 19.18% for the trailing three-year period, which makes IHDG a medium risk choice in this particular space. With about 228 holdings, it effectively diversifies company-specific risk.

Alternatives

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 $11.62 billion in assets, Vanguard Dividend Appreciation ETF has $46.41 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

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.

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