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

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

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.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

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 managed by Blackrock, and has been able to amass over $924.48 million, which makes it one of the larger ETFs in the Broad Developed World ETFs. Before fees and expenses, INTF 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

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.30%.

INTF's 12-month trailing dividend yield is 2.01%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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 2.94% of the fund's total assets, followed by Rio Tinto Plc (RIO) and Bhp Group Plc (BHP).

The top 10 holdings account for about 22.22% of total assets under management.

Performance and Risk

Year-to-date, the iShares MSCI Intl Multifactor ETF has added about 1.93% so far, and it's up approximately 5.72% over the last 12 months (as of 02/08/2021). INTF has traded between $17.43 and $28.20 in this past 52-week period.

INTF has a beta of 0.90 and standard deviation of 21.30% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 214 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 Total International Stock ETF (VXUS) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $40.11 billion in assets, Vanguard FTSE Developed Markets ETF has $89.81 billion. VXUS 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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