Is FlexShares Quality Dividend ETF (QDF) a Strong ETF Right Now?

Making its debut on 12/14/2012, smart beta exchange traded fund FlexShares Quality Dividend ETF (QDF) provides investors broad exposure to the Style Box - All Cap Blend 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.

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

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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

Managed by Flexshares, QDF has amassed assets over $1.98 billion, making it one of the larger ETFs in the Style Box - All Cap Blend. This particular fund seeks to match the performance of the Northern Trust Quality Dividend Index before fees and expenses.

The Northern Trust Quality Dividend Index is designed to provide exposure to a high-quality income-oriented portfolio of long-only U.S. equity securities, with an emphasis on long-term capital growth and a targeted overall beta that is similar to that of the Northern Trust 1250 Index and the Index are selected based on expected dividend payment and fundamental factors.

Cost & Other Expenses

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Operating expenses on an annual basis are 0.37% for this ETF, which makes it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.69%.

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.

For QDF, it has heaviest allocation in the Information Technology sector --about 33.5% of the portfolio --while Financials and Healthcare round out the top three.

When you look at individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL) accounts for about 7.97% of the fund's total assets, followed by Nvidia Corp Common Stock Usd 0.001 (NVDA) and Microsoft Corp Common Stock Usd 0.00000625 (MSFT).

The top 10 holdings account for about 37.1% of total assets under management.

Performance and Risk

The ETF has lost about -1.67% so far this year and it's up approximately 17.91% in the last one year (as of 03/24/2026). In the past 52-week period, it has traded between $59.99 and $84.04

QDF has a beta of 0.93 and standard deviation of 13.82% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 126 holdings, it effectively diversifies company-specific risk .

Alternatives

FlexShares Quality Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

iShares Core S&P Total U.S. Stock Market ETF (ITOT) tracks S&P Total Market Index and the Vanguard Total Stock Market Index Fund ETF Shares (VTI) tracks CRSP US Total Market Index. iShares Core S&P Total U.S. Stock Market ETF has $79.71 billion in assets, Vanguard Total Stock Market Index Fund ETF Shares has $563.24 billion. ITOT has an expense ratio of 0.03% and VTI changes 0.03%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Blend

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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FlexShares Quality Dividend ETF (QDF): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

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