Is FlexShares Quality Dividend Defensive ETF (QDEF) a Strong ETF Right Now?
The FlexShares Quality Dividend Defensive ETF (QDEF) made its debut on 12/14/2012, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - All Cap Blend category of the market.
QDEF: FlexShares' Defensive Dividend ETF Fails To Stand Out
QDEF relies on a proprietary model to optimize a portfolio based on quality, beta, and dividend yield. At current prices, QDEF yields 1.98%. QDEF's expense ratio is 0.37%, which isn't a deal-breaker on its own. However, QDEF's fundamentals aren't as strong as VIG's and arguably, DGRO's, both of which are lower-cost options. The Index's security constraints result in high allocations to low-yielding mega-cap stocks like Apple, Microsoft, Nvidia, and potentially Nvidia, come August. Technology exposure is currently 30%.
QDEF: Great Name, But Holdings Don't Validate
The FlexShares Quality Dividend Defense Index Fund aims to capture defensive, high-quality dividend stocks. However, the top holdings of the fund, such as Apple, Microsoft, Nvidia, and Broadcom, do not align with the defensive strategy. The sector composition of QDEF, with a large allocation to Information Technology, raises concerns about its defensive positioning.
