Want Overseas Exposure Without Buying The Junk? This Fund Has A Filter

IQLT tracks the MSCI World ex USA Sector Neutral Quality Index, selecting developed-market stocks using high return on equity, stable year-over-year earnings, and low debt-to-equity. Sector neutrality prevents concentration in a single country or industry by choosing the highest-quality names within each sector. Financials remain a major holding at about 25%, followed by industrials at about 18% and health care at about 10%. The portfolio is mostly European, with the United Kingdom at about 17%, Switzerland at about 15%, Japan at about 12%, and Canada at about 8%. The fund holds roughly 300 profitable, low-leverage companies and charges 0.30% annually, without leverage, derivatives, or options overlays. Recent performance shows IQLT returning about 18% over one year versus about 21% for EFA, and about 42% over five years.

"IQLT tracks the MSCI World ex USA Sector Neutral Quality Index, which selects developed-market stocks based on strong balance sheets and stable profitability. In practice, that means three screens (high return on equity, stable year-over-year earnings, and low debt-to-equity). Sector neutral matters here, because the fund is not allowed to dump every European bank in favor of Swiss pharma. It picks the highest-quality names within each sector, which is why financials still anchor the fund at 25%, followed by industrials at 18% and health care at 10%."

"Geographically, you are mostly buying Europe. The United Kingdom is the largest country weight at 17%, with Switzerland at 15%, Japan at 12%, and Canada at 8%. You get international multinationals that show up in every quality screen because they generate cash through cycles and carry investment-grade balance sheets."

"You also own the fundamental cash flows of roughly 300 of the most profitable, least-leveraged developed-market companies, and you pay 0.30% a year for the privilege. No options overlay, no leverage, no clever derivatives. Just stock picking by formula."

"Over the past year, IQLT returned about 18%, while the unscreened broad-international benchmark iShares MSCI EAFE ETF (EFA) returned about 21%. Over five years, IQLT delivered about 42% a"

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