BlackRock’s (NYSE: BLK) iShares unit, the world’s largest issuer of exchange traded funds, expanded its already successful lineup of factor-based ETFs with last week’s launches of two international factor funds.
The iShares MSCI International Developed Momentum Factor ETF (NYSEArca: IMTM) and the iShares MSCI International Developed Quality Factor ETF (NYSEArca: IQLT) debuted last week. Like their U.S.-focused counterparts, the new ETFs seek to isolate sources of returns not typically found with traditional market capitalization-weighted funds.
“iShares MSCI International Developed Momentum Factor ETF seeks to track the performance of an index that measures the performance of large- and mid-cap developed international stocks exhibiting relatively higher momentum characteristics, while iShares MSCI International Developed Quality Factor ETF seeks to track the investment results of an index that measures the performance of large- and mid-cap developed international stocks as identified through three fundamental variables: return on equity, earnings variability and debt-to-equity,” according to a statement issued by BlackRock.
IMTM takes a factor-driven approach to the EAFE countries. The new ETF features an almost 29.6% weight to Japan with another combined 31% allocated to Canada and Switzerland. None of IMTM’s 269 holdings command a weight of more than 5.3%. The ETF’s top 10 holdings include Novartis (NYSE: NVS), Teva Pharmaceuticals (NasdaqGS: TEVA) and Toronto Dominion Bank (NYSE: TD). [Some ETF Dividends Could be Stung by Franc Surge]
IMTM charges 0.3% per year.
The iShares MSCI International Developed Quality Factor ETF tracks the MSCI World ex USA Sector Neutral Quality Index and also features a heavy developed markets tilt. In the case of IQLT, that new fund devotes more than 40% of its combined weight to British and Swiss stocks.
No stock accounts for more than 5.16% of IQLT’s weight and top 10 holdings include Roche, Nestle (OTC: NSRGY) and Royal Dutch Shell (NYSE: RDS-A). IQLT also charges 0.3% per year.
“Client interest in smart beta is growing because institutional investors seek transparent ways to manage risk and capture return potential. The iShares Equity Smart Beta suite provides investors a diverse set of exposures built on sound academic and empirical evidence. These new funds help us provide comprehensive smart beta exposure,” said Mark Carver, head of iShares Equity Smart Beta, in the statement.
iShares’ momentum, quality, size and value factor ETFs have over $2 billion in combined assets under management. That group includes the $514.7 million iShares MSCI USA Momentum Factor ETF (NYSEArca: MTUM) and the $640.2 million iShares MSCI USA Value Weighted Index Fund (NYSEArca: VLUE). [Caution With Bespoke ETFs]
ETF Trends editorial team contributed to this post.