This ETF selects and holds high-dividend-yield stocks in developed markets outside the US. It tracks the Dow Jones Europe/Pacific Select Dividend Index and applies dividend-based weights at the country and stock level.

It suits investors who want to broaden diversification with dividend assets outside the US and supplement dividend cash flow, as a complementary holding.

It is a passive (index-tracking) ETF managed by BlackRock (iShares).

From listed companies in developed markets outside the US, it selects those with the highest dividend yields. Country weights are set first, and within each country, stocks are weighted by dividend size. Caps at the stock, sector, and country level limit excessive concentration in any one area.

• Focus on high-dividend stocks in developed markets outside the US
• Caps applied at the country, sector, and stock level

Assets under management (AUM) stand at $8.3B, and the expense ratio is 0.50% per year.

Compared with broadly diversified international dividend ETFs, it places a more pronounced emphasis on selecting high-dividend stocks, and expense ratios differ accordingly depending on the category.

It moves with the performance of dividend stocks in overseas developed markets, and volatility tends to appear depending on exchange rates and the interest rate environment. Because of its high-dividend focus, it is sometimes seen outperforming in periods when value stocks and financials carry heavy weights.

Demand for regional diversification from US-concentrated portfolios and demand for supplemental dividend cash flow underpin fund flows. Preferences for overseas assets shift during phases of dollar strength and weakness, and inflows and outflows tend to fluctuate as a result.

Its strengths are high-dividend diversification outside the US and dividend cash flow, while its main drawbacks are currency exposure and concentration in certain sectors.

VYMI, shown in the table, is a direct substitute that offers the same high-dividend diversification outside the US at a lower expense ratio, while DFAI, DFIC, and DFAX are options closer to broad core exposure than to dividends. For a focus on dividend growth, there is VIGI, and if you want to narrow the comparison to US high-dividend stocks, SCHD is also worth considering.

These are the points to review before investing in IDV. It is an overseas dividend diversification asset, but its expense ratio level, currency exposure, and sector concentration resulting from high-dividend screening can affect long-term returns, so they should be checked before buying.

Currency fluctuations and sector concentration stemming from its high-dividend nature are the main drivers of short-term volatility. In periods of rising interest rates, high-dividend assets can underperform, so position sizing needs to be adjusted.

It is worth considering as a complementary holding for investors who want high-dividend exposure to developed markets outside the US. For an even lower expense ratio, VYMI can be an alternative, and for more emphasis on dividend growth, so can VIGI.