IShares International Equity Factor ETF INTF targets stocks with an attractive set of factor and style characteristics and its fee was recently cut in half. But the strength of its factor exposures can change over time, making it difficult to determine how or when they will influence its future performance. It earns a Morningstar Analyst Rating of Bronze.

On June 1, 2022, this exchange-traded fund changed its target index to the STOXX International Equity Factor Index from the MSCI World ex USA Diversified Multiple-Factor Index. Like the old benchmark, the new bogy uses an optimizer to select and weight stocks with a combination of factors that have historically outperformed the market over the long run. More specifically, it looks for stocks with a strong combined exposure to the value, momentum, quality, low volatility, and small size factors.

The new index takes steps to control its active risk by keeping its expected tracking error within 1% of its parent universe. This should muzzle the influence of stock-specific risks, a concern that crept into the old bogy. The optimizer also keeps sector and country weights close to their market weights, so it doesn't incur a lot of risks that aren't likely to be compensated.

The strategy tries to provide exposure to five factors, but only two stand a chance to show up in a meaningful way. The index's rules limit the influence of the small size and low volatility factors, so those aren’t likely to come through in the final portfolio. Its momentum exposure is hampered by its sector and country constraints because the momentum factor often leans heavily into the strongest-performing segments of the market. As a result, the quality and value factors should be the only two that will be strong enough to influence the ETF’s future performance.

The strength of those two factors appears to meaningfully change over time in unpredictable ways, making it difficult to determine how or when they will drive its future performance. BlackRock cut the fee on this fund to 0.15% on March 31, 2022, because the new index incurs less active risk than the outgoing bogy, which limits its opportunity to outperform the market.

Analyst Rating

A new target index brings improvements, but a shortcoming remains.

Senior Analyst

Daniel Sotiroff

ASML Hld

National Energy Services Reunited

Novan

Moelis

Royal Bank of Canada

TotalEnergies SE

AstraZeneca

BHP Billiton

Rogers

Thomson Reuters

This multifactor strategy leans more heavily on the quality and value factors without incurring too much active risk. But its exposure to these factors can change over time and may lead to unpredictable performance. It earns an Average Process Pillar rating.

Average

Process

BlackRock's industry-leading technology, global footprint, and extensive supporting cast earn an Above Average People Pillar rating. The team employs BlackRock's Aladdin platform to fulfill much of its portfolio management tasks, and global trading desks allow traders to conduct foreign transactions in a cost-effective way.

The iShares index equity team has endured some internal turnover at the top over the past few years. But index-tracking performance should remain tight thanks to heavily automated processes, a large team of seasoned professionals, and several long-tenured managers that remain at the helm. Amy Whitelaw left the team in February 2023 for another role within the organization. Paul Whitehead replaced Alan Mason as a manager in January 2022, when Mason left to focus on the firm's customized institutional indexing capabilities. The broader index equity group, co-headed by Jennifer Hsui and Paul Whitehead, will continue to oversee iShares equity ETFs.

These managers interact with a wider team of traders and managers around the globe to execute the fund's day-to-day operations. The larger number of managers also limits the impact of personnel turnover when it does occur.

Above Average

People

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Parent

iShares MSCI Intl Multifactor ETF

INTF tracks an index of large- and mid-cap equities in developed markets outside the US. Stocks are selected and weighted to maximize exposure to five factors: momentum, quality, value, low volatility, and size.

Designed to provide broad exposure to the Broad Developed World ETFs category of the market, the iShares International Equity Factor ETF (INTF) is a smart beta exchange traded fund launched on 04/28/2015.

Is iShares International Equity Factor ETF (INTF) a Strong ETF Right Now?

iShares MSCI Emerging Markets Multifactor ETF

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In today's market environment, exchange traded fund investors should consider exposure to rewarded factors while aiming to maintain a controlled level of active risk relative to the market cap benchmark.

Look to Multi-Factor, Smart Beta ETFs to Enhance Your Core Portfolio

The investment premium historically offered by market factors such as quality, value, momentum, size, and minimum volatility, has attracted many investors who are seeking to diversify their traditional equity portfolio allocations, but these factors have also followed cyclical trends of their own.

Blending Quality, Value, Momentum, Size and Minimum Volatility

BlackRock has made changes to two ETFs within its iShares Multifactor suite. Effective Wednesday, the iShares US Equity Factor ETF (LRGF) will follow the STOXX US Equity Factor Index, while the iShares International Equity Factor ETF (INTF) will follow the STOXX International Equity Factor Index.

BlackRock Changes Indexes, Fees, For 2 iShares Multifactor ETFs

NEW YORK--(BUSINESS WIRE)--Effective today, BlackRock implemented changes to the iShares Multifactor suite, bringing enhanced systematic multifactor investing capabilities to the foundation of portfolio construction. The iShares US Equity Factor ETF (LRGF) and the iShares International Equity Factor ETF (INTF) updates are as follows: Summary of Enhancements LRGF INTF New Fund Name iShares US Equity Factor ETF iShares International Equity Factor ETF New Investment Objective Seeks to track the in

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Vanguard FTSE Emerging Markets ETF

iShares has lowered the expense ratios on several popular funds in a move that makes its already low-cost ETFs even more accessible to investors. The affected funds include the iShares Core U.S. Aggregate Bond ETF (AGG), the iShares Core MSCI Emerging Markets ETF (IEMG), the iShares Core MSCI Total International Stock ETF (IXUS), the iShares [.

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iShares MSCI EM ESG Optimized ETF

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iShares S&P Mid-Cap 400 Value ETF

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iShares Latin America 40 ETF

iShares MSCI Intl Momentum Factor ETF

Invesco RAFI Strategic Developed ex-US ETF

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SPDR S&P 400 Mid Cap Growth ETF

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Vanguard International High Dividend Yield ETF

Growth and value equities lead the way. Targeted exposures are ascendant, while diversification is waning, in the international market.

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Vanguard U.S. Multifactor ETF

Factor investing is an alternative to indexing and active investing that has outperformed the market in the past.

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