FlexShares Quality Dividend Index Fund (QDF)

ETF FlexShares Quality Dividend Index Fund Summary

Profile:

The ETF FlexShares Quality Dividend Index Fund (QDF) is a passively managed exchange-traded fund that tracks the Northern Trust Quality Dividend Index. This index focuses on high-quality, dividend-paying US companies with strong fundamentals and a history of consistent dividend payments. The fund invests in a diversified portfolio of approximately 100 stocks across various sectors, with a focus on value and quality.

Objective:

The primary investment goal of QDF is to provide investors with a high level of current income through dividend payments, while also aiming for long-term capital appreciation.

Issuer:

QDF is issued by Northern Trust Asset Management, a global investment manager with over 130 years of experience and a strong reputation in the industry. Northern Trust has a proven track record of managing index funds and ETFs, with over $1.2 trillion in assets under management.

Market Share:

QDF has a market share of approximately 0.3% within the broad dividend ETF category, making it a relatively small player in the market.

Total Net Assets:

As of October 27, 2023, QDF has total net assets of approximately $1.5 billion.

Moat:

QDF's main competitive advantage lies in its focus on quality. The fund invests in companies with strong fundamentals, consistent dividend payouts, and low debt levels. This focus on quality helps to reduce volatility and provide investors with a more reliable stream of income.

Financial Performance:

QDF has historically outperformed its benchmark, the S&P 500 Index, with lower volatility. Over the past 3 years, QDF has delivered an annualized return of 11.5%, compared to 9.5% for the S&P 500.

Growth Trajectory:

The demand for income-generating investments is expected to remain strong, supporting the growth of dividend ETFs like QDF. The aging population and the increasing need for retirement income are key drivers of this trend.

Liquidity:

QDF has an average daily trading volume of approximately 500,000 shares, making it a relatively liquid ETF. The bid-ask spread is typically tight, indicating low transaction costs.

Market Dynamics:

Several factors can affect QDF's market environment, including rising interest rates, economic growth, and changes in investor sentiment towards dividend-paying stocks.

Competitors:

Key competitors of QDF include Vanguard Dividend Appreciation ETF (VIG), iShares Select Dividend ETF (DVY), and SPDR S&P Dividend ETF (SDY). These ETFs have similar investment objectives but may differ in terms of fees, holdings, and performance.

Expense Ratio:

QDF's expense ratio is 0.30%, which is relatively low compared to other dividend ETFs.

Investment Approach and Strategy:

QDF tracks the Northern Trust Quality Dividend Index, which uses a quantitative approach to select stocks based on factors such as dividend yield, payout ratio, financial strength, and earnings stability.

Key Points:

• Focus on high-quality dividend-paying stocks
• Strong track record of outperformance
• Low expense ratio
• Relatively liquid

Risks:

• Volatility: QDF is still subject to market fluctuations and may experience periods of negative returns.
• Market Risk: The fund's performance is tied to the performance of its underlying holdings, which could be impacted by various factors like economic downturns or sector-specific issues.
• Interest Rate Risk: Rising interest rates can make dividend-paying stocks less attractive, potentially impacting QDF's performance.

Who Should Consider Investing:

QDF is suitable for investors seeking a steady stream of income through dividend payments while also aiming for moderate capital appreciation. It is particularly appealing to investors nearing retirement or those who require regular income from their investments.

Fundamental Rating Based on AI:

Based on an AI analysis of various factors including financial health, market position, and future prospects, QDF receives a 7 out of 10. This rating reflects the fund's strong track record, focus on quality, and competitive expense ratio. However, investors should be aware of the potential risks associated with market volatility and interest rate fluctuations.

Resources and Disclaimers:

This analysis is based on data gathered from the following sources:

• Northern Trust Asset Management website
• ETF.com
• Morningstar

This information should not be considered as financial advice. Investors should conduct their own due diligence before making any investment decisions.