IQ Candriam International Equity ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in liquidity exposure and an underweight in momentum exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And low momentum exposure is rooted in holding stocks that are not currently on a winning streak and instead holding those that managers believe are undervalued. The team managing the passive strategy earns the strategy an Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

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Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. IQ Candriam International Equity ETF earns an Above Average Process Pillar rating. The most significant contributor to the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The firm's five-year retention rate of 87% also supports the rating. Lastly, the process is limited by its parent firm's disappointing risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.8 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

The investment strategy as stated in the fund's prospectus is:  The investment seeks investment results that track (before fees and expenses) the price and yield performance of its underlying index, the IQ Candriam International Equity Index.  The Advisor employs a "passive management" - or indexing - investment approach designed to track the performance of the underlying index. The underlying index is designed to deliver exposure to equity securities of companies meeting environmental, and social and corporate governance (ESG) criteria developed by Candriam and weighted using a market-capitalization weighting methodology. 

 The portfolio is overweight in healthcare by 4.0 percentage points in terms of assets compared with the category average, and its consumer cyclical allocation is similar to the category. The sectors with low exposure compared to category peers are industrials and basic materials, with industrials underweighting the average portfolio by 3.0 percentage points of assets and basic materials similar to the average. The portfolio is composed of 629 holdings and is relatively concentrated. Specifically, 21.3% of the fund’s assets are housed within the top 10 holdings, compared with the typical peer's 15.4%. And finally, in terms of portfolio turnover, on a year-over-year basis, 17% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Above Average

Process

New York Life’s team receives An Average People Pillar rating. The main contributor to the rating is the firm's five-year retention rate of 87%. A low cost, with fees that rank in its category's least expensive 20%, also contributes to the rating. A higher expense ratio reduces net returns, so low costs give this team an advantage. Lastly, the rating is limited by the parent firm's five-year success ratio of 44%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup.

Average

People

New York Life Investments' collection of autonomous investment boutiques will have a new leader in May 2023, and it will take time to assess his impact. The firm keeps its Average Parent rating.
New York Life, the insurance giant that owns NYL Investments, tapped Naïm Abou-Jaoudé to be the asset manager's CEO after the previous CEO departed. Abou-Jaoudé inherits a firm that has grown by building internally and through acquisition. The firm offers mandates in partnership with 13 different asset managers--eight of which are wholly or partially owned affiliates – through several global outlets. Most U.S. funds fall under the established MainStay brand, whereas IndexIQ oversees a growing lineup of ETFs managed both internally and by other affiliates. Candriam, at which Abou-Jaoudé has been CEO even prior to its 2014 acquisition by NYL Investments, takes the lead in Europe through its own offerings and through those subadvised by other boutiques.
Plenty of these capabilities are compelling, with Candriam and fellow affiliates MacKay Shields and Ausbil sporting standout teams in several wheelhouses. Yet many of the boutiques have also struggled with managing bloated lineups or with improving lagging teams. NYL Investments hasn't shied from changing subadvisors or merging platforms and doesn't have a spotless record of managing capacity or of avoiding trendy offerings.

Parent

IQ Candriam ESG International Equity ETF

IQSI tracks a proprietary index of developed-market stocks selected by ESG criteria and weighted by market-cap.

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On this episode of ETF Prime, VettaFi's Stacey Morris offered a quarterly update on the energy sector and energy ETFs with host Nate Geraci. Candriam's Alexandra Russo later joined Geraci to discuss ESG investing mishaps and opportunities.

ETF Prime: Morris Provides Quarterly Energy Sector Update

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Investigate IQSI as US Stocks' Run of Dominance Wanes

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European Stocks Could Propel This ESG ETF

Investors in the U.S. are by now undoubtedly familiar with the Federal Reserve's rate tightening campaign, which has consisted of six interest rate increases this year. Similar monetary tightening is being pursued around the world.

Slower Pace of Rate Hikes Could Lift IQSI

With U.S. stocks slumping, it's not surprising that international equivalents are out of favor among market participants. The other side of that coin is that there's bountiful opportunity among ex-U.S. developed market equities.

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With environmental, social and governance (ESG) exchange traded funds increasingly popular ideas among advisors and retail investors alike, there's also increasing scrutiny on how products in this category deliver the purported ESG goods. That scrutiny is warranted because the various index issuers providing benchmarks to ETF sponsors approach ESG in differing fashions.

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Investors can look to achieve “sustainable alpha” or socially responsible portfolio outperformance through the use of impact exchange traded fund investment strategies aligned to the UN's Sustainable Development Goals. In the recent webcast, Sustainable Alpha: How Thematic Investing Seeks to Deliver Dual Impact, Wendy Wong, head of sustainable investment partnership at New York Life Investments, [.

Sustainable ETF Investments Can Support Social Good and Enhance Portfolios

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News for IQ Candriam ESG International Equity ETF ETF (IQSI)