Simple International ETF Analysis – IDV

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Most balanced and well-diversified portfolios should have some international investments. This is why I started looking into international funds. I don’t know much about the world economy and figured it’s safer to look into an international fund, or rather ETF due to my bias with them, instead of individual companies.

 

So I present a simple analysis of iShares International Select Dividend ETF (IDV).

 

 

IDV – History

 

IDV’s inception date was June 11, 2007, so it’s been around for over a decade. The fund’s objective is to track the Dow Jones Europe, Pacific, Asia, and Canada (EPAC) Select Dividend Index. IDV tracks the index pretty well as here are the top constituents of the DJ’s EPAC:

Simple IDV Analysis - EPAC Consituents - simple money man

 

Many of these are holdings are comprised within IDV as you’ll see later in this post.

 

IDV’s Net Asset Value since its inception has dropped significantly. It started at ~$50 and now the Net Asset Value is ~$33. This is a 34% drop since its inception:

Simple IDV Analysis - Price Chart

 

 

IDV dropped the most during the financial crisis in 2008-2009 of course and has since bounced back, though not at its original price point.

 

In other data, IDV’s net assets are around $4.5 billion and the annual expense ratio is 0.49%. You may be wondering how this compares to others. Well, Vanguard has an international dividend fund: Vanguard International Dividend Appreciation ETF – VIGI, with net assets at $1.1 billion and an expense ratio is 0.25%.

 

It’s important to note that Vanguard’s VIGI’s inception date is 2/25/2016 so it’s been around for less than three years. This compared to IDV’s inception date of 6/11/07 is s difference of almost nine years of data and performance.

 

 

IDV – Dividend

 

Despite the value of the fund dropping, it still pays a nice dividend, one of its main characteristics. The yield is ~5%. However, that dividend yield has been decreasing. For the past three years, per dividend.com it has decreased by -24.1%.

 

In continuing our comparison with Vanguard’s VIGI, its yield is 1.82%.

 

 

IDV Composition

 

The top 10 holdings within IDV covers six different industries and fairly evenly. The weight of all 10 holdings accounts for less than 25% of the funds’ assets:

 

IDV as a whole has 101 holdings as of October 2018.

 

 

IDV – International Scope

 

While IDV encompasses 101 holdings, not all of them are from all across the globe. Per Seeking Alpha, 41% of the holdings are from the United Kingdom and Australia, only two countries. In other words, there are no holdings from China, India or Japan, countries in Asia to expand international scope further into these major international markets.

 

I’ve found this exposure limitation mentioned by several other financial writers and criticism of the high expense ratio as a result.

 

 

IDV Versus SPDR ETF DWX

 

Seeking Alpha also mentioned other international ETFs, which have assets of only $1 billion or less. For example, the SPDR S&P International Dividend ETF (DWX) has assets of about $853 million. It’s been around since 2/12/2008, has a yield of 4.41% and an expense ratio of 0.45%. So apart from the assets, other factors between IDV and DWX are fairly similar.

 

And here is the performance comparison between IDV and DWX:

 

As we can see, IDV has recovered better than DWX from the financial crisis in 2008-2009, by about 20%.

 

 

IDV – Final Thoughts

 

To wrap it up, IDV provides international exposure, a high yield, better performance compared to peers.

 

One may argue that the expense ratio is high. This would be true if we compared it to standard or general dividend ETFs, but I’ve found with international ETFs such as DWX and others, IDV’s expense ratio is comparable.

 

Additionally, the expense ratio with actively managed international funds is even higher compared to an ETF which is passively managed.

 

Although you have diversification into international space, IDV’s holdings are somewhat limited to the United Kingdom and Australia.

 

As mentioned before, the biggest advantage of IDV appears to be its high dividend yield. At almost 5%, you get exposure to the international sector and can earn a nice chunk of change depending on how much you invest.

 

Another aspect to consider with IDV is the size of the fund. At $4 billion dollars in assets, it is by far the largest international ETF and provides some assurance that so many have invested possibly large sums.

 

I’m not totally convinced on IDV yet, but it was fun to do a simple analysis and see what it has to offer from an international investment perspective.

 

 

Join The Discussion:

  1. Do you own IDV?
  2. Do you own any international ETFs or index funds?
  3. What percentage of your portfolio is comprised of international equities?

 

 

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