Launched on 12/14/2012, the FlexShares Quality Dividend ETF (QDF) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
QDF is managed by Flexshares, and this fund has amassed over $2.02 billion, which makes it one of the larger ETFs in the Style Box - All Cap Blend. QDF 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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.37%.
The fund has a 12-month trailing dividend yield of 1.65%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 34.7% of the portfolio, the fund has heaviest allocation to the Information Technology sector; 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 8.46% 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).
Its top 10 holdings account for approximately 38.58% of QDF's total assets under management.
Performance and Risk
The ETF has lost about -0.32% so far this year and is up about 14.49% in the last one year (as of 01/21/2026). In the past 52-week period, it has traded between $59.99 and $82.45
The ETF has a beta of 0.93 and standard deviation of 13.96% for the trailing three-year period, making it a medium risk choice in the space. With about 124 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 ETF (VTI) tracks CRSP US Total Market Index. iShares Core S&P Total U.S. Stock Market ETF has $80.52 billion in assets, Vanguard Total Stock Market ETF has $570.25 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 ReportsThis article originally published on Zacks Investment Research (zacks.com).
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