Smart Beta Funds: FlexShares Quality Dividend ETF (QDF)
While Northern Trust (NTRS) is mostly thought as a bank for affluent individuals, it’s also a huge provider of index funds. It’s also becoming a major player in smart beta ETFs.
Case in point: the $425 million FlexShares Quality Dividend ETF (QDF).
There are plenty of ETFs that focus on dividends as a way to weight their constituents. However, the bulk of these tend to just look at underlying high yields, payment histories and dividend growth. QDF takes this one step further by applying screens to weed out potential problems. By looking at factors such as profitability and reliable cash flows, QDF attempts to rank its holdings based on dividend quality.
QDF currently tracks 204 different firms and yields a healthy 2.92%. While that yield isn’t as high as some dividend-focused ETFS, the key is that investors are getting better quality dividend payers. High-yielding stocks with “sketchy” financials — like Frontier Communications (FTR) — won’t be found in QDF.
Expenses run at 0.38% annually.