FlexShares Solves Quality ETF Conundrum

“Of course you want to pick high quality companies, but the bigger deal is missing low quality companies,” added Thomas. “Rather than investing in the lowest quintile firms, we reinvest in the top quintile.”

Still, QDF, QDEF and QDYN do not short-change investors on the yield front. The average weighted average dividend yield across the three ETFs is about 3.2%, or about 140 basis points more than the yield on the S&P 500. [This Dividend ETF Deserves More Attention]

“If portfolios aren’t thoughtfully conceived, they can have sector or security concentration,” said Thomas. “We’re buffered against that risk by our rules-based approach that limits sector and security exposures. We want reliable income, but not at the risk of capital appreciation.”

To that end, the largest sector weight found in any of the three FlexShares ETFs highlighted here is a 21.5% weight to financials in QDYN.

FlexShares dividend ETF performance vs. the largest dividend ETF