Stay Ahead of Inflation With This International Dividend ETF | ETF Trends

The Biden administration has its hands full as the economy continues to recover from the pandemic but also faces headwinds of inflation.

That said, investors will need to be cognizant of their options when looking at fixed income. This means looking for ways to hedge against the rising tide of inflation.

“Rising prices, product shortages and labor market tumult are making for a surprisingly rocky economic recovery, testing the political skills of the Biden White House little more than one year before the midterm congressional elections,” a Washington Post article explained.

“Administration officials are confronting an unfamiliar economic landscape of strong growth and rising wages, even as the highest inflation in 13 years and persistent problems moving goods from overseas factories to American doorsteps spark public unease,” the article added. “The latest monthly employment report, which showed the smallest job growth since January, also rattled Democrats’ nerves.”

Staying a Step Ahead of Inflation

Safe haven government debt may not be enough for fixed income investors to stay ahead of inflation. As such, investors may need to look abroad to international dividends using ETFs like the FlexShares International Quality Dividend Index Fund (IQDF).

The fund is one of the many dividend ETFs that FlexShares offers and one of the variants of the firm’s popular international dividend funds. IQDF gives investors access to quality dividends that focus primarily on stability.

A dividend ETF is an ideal alternative for investors looking to extract that extra slice of yield, especially in the current market. With IQDF, investors also get income diversification with its inclusion of international holdings.

International dividend ETFs work much like their domestic high dividend counterparts. The primary discerning feature is that they simply invest in international companies instead of those domiciled in the U.S.

Per the fund description, IQDF seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust International Quality Dividend Index. The index reflects the performance of a selection of companies that, in aggregate, possess greater financial strength and stability characteristics relative to the Northern Trust International Large Cap Index, a float-adjusted market capitalization-weighted index of non-U.S.-domiciled large- and mid-capitalization companies.

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