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Bring Quality to International Stocks With IDHQ

BY | ETF Database
4:11 am ET 11/13/26 | 13 VIEWS
Although it doesn’t always generate comparable buzz to the growth and value factors, quality investing is a durable approach that’s delivered over the long term.It’s also accessible via an array of ETFs, including the Invesco S&P 500 Quality ETF (SPHQ B). SPHQ, which is one of the leaders in the domestic quality equity ETF clubhouse, has an international counterpart — the Invesco S&P International Developed Quality ETF (IDHQ A-). The $1.26 billion IDHQ, which turned 19 years old in June, employs a similar methodology to that of its U.S.-focused counterpart. IDHQ tracks the S&P Quality Developed Ex-U.S. LargeMidCap Index, which emphasizes balance sheet strength, earnings quality, and companies’ profitability strength.IDHQ a Durable Approach to International StocksThis year, IDHQ is strutting its stuff, trouncing the MSCI EAFE Index by a margin of more than 2-to-1. That’s old hat for the Invesco ETF. Over the past three years, the fund beat the developed market gauge by more than 1,500 basis points. “Across both short- and long-term horizons, the S&P Quality Developed Ex-U.S. LargeMidCap Index has outperformed its benchmark. The index has also historically exhibited defensive characteristics, including lower drawdowns and lower downside capture,” according to S&P Dow Jones Indices. Another reason to consider IDHQ is inflation. With inflation running hot in the U.S. and many governments in other developed markets unable to adequately address spending, inflation may be a headwind for some time. Fortunately, IDHQ’s index has a track record of thriving in inflationary environments.Structural Resilience?“Historically, the index has tended to outperform during periods of rising inflation, a regime that may be of particular relevance given the current market environment,” added S&P. “This historical performance may reflect the structural resilience of companies with strong profitability, high earnings quality and robust balance sheets when inflationary pressures remain elevated. Another advantage offered by IDHQ is that the ETF can act as a portfolio diversifier. That’s true not only because it’s an international fund, but also because of sector weights that tilt away from the growth-heavy areas to which many U.S. investors devote significant portions of their portfolios. “International equity markets reflect a broad range of geographies, economies and industries,” observed S&P. “The developed markets outside the U.S. represented in the S&P Quality Developed Ex-U.S. LargeMidCap Index have significant weight in Industrials, Health Care and Financials. This opportunity set differs meaningfully from the tech-heavy U.S. market.” IDHQ holds 184 stocks, of which nearly a third are Swiss and Japanese. Nearly 21% are British and German. For more news, information, and analysis, visit the Innovative ETFs Content Hub.

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