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Is iShares MSCI Intl Multifactor ETF (INTF) a Strong ETF Right Now?

Zacks.com logo Zacks.com 10/16/2020

The iShares MSCI Intl Multifactor ETF (INTF) was launched on 04/28/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Broad Developed World ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the 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.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

The fund is sponsored by Blackrock. It has amassed assets over $859.60 million, making it one of the larger ETFs in the Broad Developed World ETFs. Before fees and expenses, this particular fund seeks to match the performance of the MSCI World ex USA Diversified Multi-Factor Index.

The MSCI World ex USA Diversified Multi-Factor Index is designed to select equity securities from MSCI World ex USA Index that have high exposure to four investment style factors: value, quality, momentum and low size, while maintaining a level of risk similar to that of the Parent Index.

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Annual operating expenses for this ETF are 0.30%, making it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 3.17%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Taking into account individual holdings, Roche Holding Par Ag (ROG) accounts for about 3.30% of the fund's total assets, followed by Rio Tinto Plc (RIO) and Bhp Group Plc (BHP).

INTF's top 10 holdings account for about 22.37% of its total assets under management.

Performance and Risk

The ETF has lost about -7.95% so far this year and is down about -1.95% in the last one year (as of 10/16/2020). In the past 52-week period, it has traded between $17.43 and $27.44.

INTF has a beta of 0.88 and standard deviation of 20.86% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 207 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares MSCI Intl Multifactor 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 FTSE AllWorld exUS ETF (VEU) tracks FTSE All-World ex US Index and the Vanguard FTSE Developed Markets ETF (VEA) tracks FTSE Developed All Cap ex US Index. Vanguard FTSE AllWorld exUS ETF has $25.14 billion in assets, Vanguard FTSE Developed Markets ETF has $75.19 billion. VEU has an expense ratio of 0.08% and VEA charges 0.05%.

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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