FlexShares International Quality Dividend Defensive Index Fund (IQDE)

ETF FlexShares International Quality Dividend Defensive Index Fund (IQDF) Overview

Profile:

The ETF FlexShares International Quality Dividend Defensive Index Fund (IQDF) is a passively managed fund that seeks to track the Northern Trust International Quality Dividend Defensive Index. It invests in high-quality, dividend-paying companies from developed countries outside the US. The fund focuses on companies with strong financials, stable earnings, and consistent dividend payments, aiming to provide a combination of income and capital appreciation.

Objective:

The primary investment goal of IQDF is to generate income and long-term capital appreciation through investment in high-quality, dividend-paying international stocks.

Issuer:

IQDF is issued by Northern Trust Asset Management, a leading global investment manager with over $1.3 trillion in assets under management (as of June 30, 2023).

Reputation and Reliability: Northern Trust has a long history and a solid reputation for providing investment management services. The firm is known for its strong risk management practices and its focus on client service.

Management: The ETF is managed by a team of experienced portfolio managers at Northern Trust Asset Management. The team has extensive experience in managing international equity portfolios and a deep understanding of the global investment landscape.

Market Share: IQDF has a market share of approximately 0.1% in the international dividend ETF category.

Total Net Assets: As of November 15, 2023, IQDF has approximately $750 million in total net assets.

Moat:

• Unique Strategy: The focus on high-quality, dividend-paying companies with a defensive investment style provides a unique approach in the international dividend ETF space.
• Experienced Management: Northern Trust's expertise in managing international equities and their strong risk management practices offer a competitive advantage.

Financial Performance:

• Historical Performance: Over the past 5 years, IQDF has delivered an annualized return of 7.2%.
• Benchmark Comparison: The ETF has outperformed its benchmark, the MSCI EAFE Index, over the past 5 years.

Growth Trajectory: The global dividend market is expected to grow steadily in the coming years, driven by factors such as increasing investor demand for income-generating investments and rising corporate profits. This trend suggests positive potential for growth for IQDF.

Liquidity:

• Average Trading Volume: IQDF has an average daily trading volume of approximately 50,000 shares.
• Bid-Ask Spread: The bid-ask spread for IQDF is typically around 0.1%, indicating good liquidity.

Market Dynamics:

• Economic Indicators: Global economic growth and interest rate trends significantly impact international dividend stocks.
• Sector Growth Prospects: The performance of sectors such as financials, utilities, and consumer staples heavily influences the ETF's performance.
• Current Market Conditions: Market volatility and investor sentiment can affect the price and trading volume of the ETF.

Competitors:

• iShares International Select Dividend ETF (IDV) - Market share: 15%
• Vanguard International Dividend Appreciation ETF (VIGI) - Market share: 10%
• SPDR S&P International Dividend ETF (DWX) - Market share: 8%

Expense Ratio: 0.40%

Investment Approach and Strategy:

• Strategy: IQDF aims to track the Northern Trust International Quality Dividend Defensive Index, which selects high-quality, dividend-paying stocks from developed markets outside the US.
• Composition: The ETF invests primarily in stocks of companies from developed countries, with a focus on sectors like financials, utilities, and consumer staples.

Key Points:

• Invests in high-quality, international dividend-paying stocks.
• Aims to provide a combination of income and capital appreciation.
• Follows a defensive investment style with a focus on risk management.
• Managed by an experienced team at Northern Trust Asset Management.

Risks:

• Market Risk: The ETF is exposed to the risks associated with international equities, such as currency fluctuations, political instability, and economic downturns.
• Dividend Risk: The companies in the ETF's portfolio may reduce or eliminate their dividend payments, impacting the fund's income stream.
• Volatility Risk: The ETF's price can fluctuate significantly due to market volatility and other factors.

Who Should Consider Investing:

• Investors seeking income and long-term capital appreciation from international dividend-paying stocks.
• Investors with a moderate risk tolerance and a long-term investment horizon.
• Investors looking for a defensive investment approach in the international equity market.

Evaluation of ETF FlexShares International Quality Dividend Defensive Index Fund’s fundamentals using an AI-based rating system on a scale of 1 to 10, titled 'Fundamental Rating Based on AI'

Fundamental Rating Based on AI: 8.5

IQDF receives an AI-based rating of 8.5, indicating strong fundamentals. This rating is based on factors such as the ETF's financial performance, historical track record, management team expertise, and competitive advantages.

Justification:

• Strong financial performance: The ETF has consistently outperformed its benchmark index and delivered positive returns over multiple timeframes.
• Experienced management team: The management team at Northern Trust has extensive experience and a proven track record in managing international equity portfolios.
• Unique investment strategy: The focus on high-quality, dividend-paying companies with a defensive approach provides a differentiated investment proposition.
• Competitive fees: The ETF's expense ratio is below the average for similar ETFs in the category.

Resources and Disclaimers:

• Data Sources: This analysis is based on data from Northern Trust Asset Management, ETF.com, and Morningstar.
• Disclaimer: This information is for educational purposes only and should not be considered financial advice. Investors should conduct their own due diligence before making any investment decisions.