FlexShares Quality Dividend Defensive Index Fund (QDEF)QDEF

ETF FlexShares Quality Dividend Defensive Index Fund Overview

Profile:

The FlexShares Quality Dividend Defensive Index Fund (QDEF) is an exchange-traded fund (ETF) that invests in high-quality, dividend-paying stocks with low volatility. It seeks to provide investors with a combination of income and capital appreciation while minimizing downside risk. QDEF tracks the Northern Trust Quality Dividend Defensive Index, which selects stocks based on factors such as financial strength, dividend yield, and price momentum.

Objective:

The primary investment goal of QDEF is to generate consistent income through dividend payments and achieve long-term capital appreciation.

Issuer:

The ETF is issued by Northern Trust Asset Management, a global investment manager with over $1.3 trillion in assets under management.

Reputation and Reliability:

Northern Trust has a strong reputation in the financial industry, with a history of over 125 years. The company is known for its commitment to client service, investment expertise, and risk management.

Management:

The ETF is managed by a team of experienced portfolio managers at Northern Trust. The team has a deep understanding of the dividend-paying stock market and a proven track record of success.

Market Share:

QDEF has a relatively small market share in the dividend-paying ETF space, with approximately $2.5 billion in assets under management.

Total Net Assets:

As of November 7, 2023, QDEF has total net assets of $2.5 billion.

Moat:

• Focus on quality: QDEF focuses on companies with strong financials, low debt levels, and consistent dividend payments, which can provide greater stability and downside protection.
• Dynamic indexing: The underlying index uses a quantitative approach to select stocks, ensuring that the portfolio remains aligned with its investment objectives.
• Experienced management team: Northern Trust has a strong track record of managing dividend-paying strategies.

Financial Performance:

QDEF has delivered a total return of 10.5% over the past year, outperforming the S&P 500 Index, which returned 7.5%. The ETF has also generated a dividend yield of 3.2%.

Benchmark Comparison:

QDEF has outperformed its benchmark, the Northern Trust Quality Dividend Defensive Index, over the past year.

Growth Trajectory:

The demand for dividend-paying ETFs is expected to grow as investors seek income and stability in their portfolios. QDEF's focus on quality and its strong track record position it well for future growth.

Liquidity:

• Average Trading Volume: QDEF has an average daily trading volume of approximately 100,000 shares, making it a relatively liquid ETF.
• Bid-Ask Spread: The bid-ask spread is typically less than 0.1%, indicating low trading costs.

Market Dynamics:

• Rising interest rates: Rising interest rates can make dividend-paying stocks more attractive compared to bonds.
• Economic uncertainty: In times of economic uncertainty, investors often seek the stability of dividend-paying stocks.

Key Competitors:

• iShares Select Dividend ETF (DVY)
• Vanguard Dividend Appreciation ETF (VIG)
• Schwab US Dividend Equity ETF (SCHD)

Expense Ratio:

The expense ratio for QDEF is 0.30%, which is relatively low compared to other dividend-paying ETFs.

Investment Approach and Strategy:

• Strategy: QDEF tracks the Northern Trust Quality Dividend Defensive Index, which follows a quantitative approach to selecting stocks.
• Composition: The ETF holds a diversified portfolio of approximately 100 stocks across various sectors, with a focus on financials, healthcare, and consumer staples.

Key Points:

• High-quality dividend-paying stocks
• Low volatility
• Consistent income
• Experienced management team
• Competitive expense ratio

Risks:

• Market risk: The value of QDEF's holdings can decline due to market fluctuations.
• Interest rate risk: Rising interest rates can make dividend-paying stocks less attractive.
• Dividend risk: Companies may reduce or eliminate dividend payments.

Who Should Consider Investing:

QDEF is suitable for investors seeking a combination of income and capital appreciation while minimizing downside risk. It is particularly appealing to investors who are in or nearing retirement and require a steady stream of income.

Fundamental Rating Based on AI:

8/10

QDEF receives a strong rating of 8 out of 10 based on an AI-based analysis of various factors, including financial health, market position, and future prospects. The ETF benefits from its focus on quality, dynamic indexing methodology, and experienced management team. However, its small market share and potential sensitivity to interest rate fluctuations warrant consideration.

Resources and Disclaimers:

This analysis is based on data from the following sources:

• Northern Trust Asset Management website
• Morningstar
• Bloomberg

This information should not be considered financial advice. Please consult with a financial advisor before making any investment decisions.