VIG - QDEF: FlexShares' Defensive Dividend ETF Fails To Stand Out

2024-05-30 20:27:30 ET

Summary

• 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%.
• This composition diminishes QDEF's defensive capabilities. While it should outperform its dividend peers in growth markets, I expect it to do the opposite in a rotation to value.

Investment Thesis

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