The SPDR MSCI EAFE StrategicFactors ETF (QEFA) made its debut on 06/04/2014, and is a smart beta exchange traded fund that provides broad exposure to the Broad Developed World ETFs category of the market.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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

The fund is managed by State Street Global Advisors, and has been able to amass over $972.93 million, which makes it one of the average sized ETFs in the Broad Developed World ETFs. Before fees and expenses, this particular fund seeks to match the performance of the MSCI EAFE Factor Mix A-Series Index.

The MSCI EAFE Factor Mix A-Series Index captures large and mid-cap representation across 22 developed market Europe, Australasia, and Far East countries and aims to represent the performance of value, low volatility, and quality factor strategies.

Cost & Other Expenses

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.30%.

QEFA's 12-month trailing dividend yield is 2.68%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

Looking at individual holdings, Nestle Sa Reg (NESN) accounts for about 2.39% of total assets, followed by Roche Holding Ag Genusschein (ROG) and Asml Holding Nv (ASML).

QEFA's top 10 holdings account for about 16.59% of its total assets under management.

Performance and Risk

The ETF has added about 4.15% and was up about 17.68% so far this year and in the past one year (as of 03/13/2024), respectively. QEFA has traded between $64.42 and $76.14 during this last 52-week period.

The fund has a beta of 0.79 and standard deviation of 15.19% for the trailing three-year period, which makes QEFA a medium risk choice in this particular space. With about 709 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR MSCI EAFE StrategicFactors ETF is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

IShares MSCI EAFE ETF (EFA) tracks MSCI EAFE Index and the iShares Core MSCI EAFE ETF (IEFA) tracks MSCI EAFE Investable Market Index. IShares MSCI EAFE ETF has $53.19 billion in assets, iShares Core MSCI EAFE ETF has $114.11 billion. EFA has an expense ratio of 0.33% and IEFA charges 0.07%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed World ETFs.

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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SPDR MSCI EAFE StrategicFactors ETF (QEFA): ETF Research Reports

ASML Holding N.V. (ASML) : Free Stock Analysis Report

Rogers Corporation (ROG) : Free Stock Analysis Report

iShares MSCI EAFE ETF (EFA): ETF Research Reports

iShares Core MSCI EAFE ETF (IEFA): ETF Research Reports

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