Designed to provide broad exposure to the Broad Developed World ETFs category of the market, the iShares International Equity Factor ETF (INTF) is a smart beta exchange traded fund launched on 04/28/2015.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
INTF is managed by Blackrock, and this fund has amassed over $1.19 billion, which makes it one of the average sized ETFs in the Broad Developed World ETFs. INTF, before fees and expenses, seeks to match the performance of the MSCI World ex USA Diversified Multi-Factor Index.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.15%.
It's 12-month trailing dividend yield comes in at 3.55%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Novo Nordisk Class B (NOVO) accounts for about 2.10% of the fund's total assets, followed by Asml Holding Nv (ASML) and Novartis Ag (NOVN).
The top 10 holdings account for about 11.98% of total assets under management.
Performance and Risk
The ETF has added about 5.51% so far this year and is up roughly 10.21% in the last one year (as of 12/23/2024). In the past 52-week period, it has traded between $27.37 and $31.79.
The ETF has a beta of 0.87 and standard deviation of 16.22% for the trailing three-year period, making it a medium risk choice in the space. With about 475 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 $73.72 billion in assets, Vanguard FTSE Developed Markets ETF has $131.05 billion. VXUS has an expense ratio of 0.08% and VEA 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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Get it free >>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
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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.
