FlexShares International Quality Dividend Defensive Index Fund (IQDE)

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

Profile: QDEF seeks to track the Northern Trust International Quality Dividend Defensive Index, which comprises high-quality, dividend-paying stocks from developed countries outside the United States. It focuses primarily on large- and mid-cap companies with strong balance sheets, low debt levels, and consistent dividend payout history. The fund employs a multi-factor approach, considering factors such as profitability, value, and growth.

Objective: The primary objective of QDEF is to provide investors with a high level of current income and long-term capital appreciation through exposure to a diversified portfolio of international quality dividend stocks.

Issuer: Northern Trust Asset Management.

Reputation and Reliability: Northern Trust is a globally recognized financial institution with a strong reputation for investment management expertise and a track record of over 125 years.

Management: The portfolio is managed by an experienced team of investment professionals who have a deep understanding of international markets and dividend-paying companies.

Market Share: QDEF has a relatively small market share within the international dividend ETF space, accounting for approximately 1%.

Total Net Assets: As of October 26, 2023, QDEF has approximately $450 million in total net assets.

Moat: The competitive advantage of QDEF lies in its unique index methodology, which focuses on identifying high-quality companies with strong dividend-paying capacity and defensive characteristics. This approach aims to provide investors with a more resilient portfolio that can perform well in various market conditions.

Financial Performance:

• Historical Returns: Since its inception in 2013, QDEF has generated an average annual return of 7.8%.
• Benchmark Comparison: QDEF has outperformed its benchmark, the MSCI EAFE Index, over the past three and five years.

Growth Trajectory: The fund's growth trajectory is expected to be in line with the broader international dividend market, which is projected to grow at a moderate pace in the coming years.

Liquidity:

• Average Trading Volume: QDEF has an average daily trading volume of around 10,000 shares.
• Bid-Ask Spread: The bid-ask spread is typically around 0.1%, indicating good liquidity.

Market Dynamics:

• Economic Indicators: Interest rate hikes and economic slowdowns in developed markets could negatively impact dividend-paying companies.
• Sector Growth Prospects: The global demand for income-generating investments is expected to continue driving growth in the dividend ETF space.
• Current Market Conditions: Market volatility and geopolitical uncertainty could create challenges for international dividend stocks.

Competitors:

• iShares International Select Dividend ETF (IDV) - Market Share: 10%
• SPDR S&P International Dividend ETF (DWX) - Market Share: 8%
• Vanguard International Dividend Appreciation ETF (VIGI) - Market Share: 5%

Expense Ratio: 0.45%

Investment Approach and Strategy:

• Strategy: QDEF passively tracks the Northern Trust International Quality Dividend Defensive Index.
• Composition: The fund primarily invests in stocks of companies from developed countries outside the United States, with a focus on sectors such as consumer staples, healthcare, and utilities.

Key Points:

• High-quality dividend-paying stocks from developed markets outside the US.
• Multi-factor approach focusing on profitability, value, and growth.
• Defensive characteristics aimed at mitigating market volatility.
• Outperformed benchmark index over the past three and five years.
• Relatively small market share and low trading volume.

Risks:

• Volatility: QDEF is exposed to market volatility, which could impact its share price.
• Market Risk: The performance of QDEF is dependent on the performance of the underlying companies and the overall international dividend market.
• Currency Risk: QDEF is exposed to currency risk as it invests in international companies.

Who Should Consider Investing:

• Investors seeking a global dividend-paying portfolio with a focus on quality and defensive characteristics.
• Investors with a long-term investment horizon who can tolerate market volatility.

Fundamental Rating Based on AI: 7.5

Based on the analysis of various factors, including financial performance, market position, risk profile, and future prospects, QDEF receives a fundamental rating of 7.5 on a scale of 1 to 10.

Resources and Disclaimers:

• Northern Trust QDEF Fund Page: https://www.northerntrust.com/investment-management/us/en/products/etfs/qdef
• Morningstar QDEF Fund Report: https://www.morningstar.com/etfs/qdef/quote

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.