Investors looking for exposure to international equities without the potential pitfalls of strategies that weight stocks by market capitalization have a growing number of exchange traded funds to consider. An interesting name in that group is the iShares Edge MSCI Multifactor Intl ETF (NYSEArca: INTF).
Through a multi-factored approach, INTF attempts to deliver enhanced returns and maximize diversification in an attempt to provide potentially improved risk-adjusted returns, compared to traditional market-capitalization-weighted indices.
Specifically, some argue that cap-weighted indices may put an investor at risk of chasing a rally since the best performing stocks would gain the most assets and typically have the largest weight in an index.
INTF “seeks to track the investment results of an index composed of global developed market large- and mid-capitalization stocks, excluding the U.S., that have favorable exposure to target style factors subject to constraints,” according to iShares.
Up nearly 14% year-to-date, INTF hit an all-time high Tuesday. The ETF debuted just over two years ago and its assets under management total is fast-approaching $245 million.
The quality metric may define stocks based on consistency in earnings and balance sheet strength. Historically, high-quality stocks have outperformed lower-quality names since speculators may engage in lottery-like behavior.