Welcome back to Factor Flavors! This edition comes with a special format. I recently participated in a lively debate on the popular podcast ETF Battles, where we put three International Dividend ETFs head-to-head. To align with the show’s format, I’m structuring this analysis around the core judging criteria we used: Cost, Exposure, Performance, and a final mystery category that often decides the winner.
It was a fantastic discussion, and you can watch the full battle here:
The ETFs in the ring were:
- IDVO – Amplify CWP International Enhanced Dividend Income ETF
- LVHI – Franklin International Low Volatility High Dividend Index ETF
- SCHY – Schwab International Dividend Equity ETF
Now, let’s dig deeper into the analysis, battle-style.
Cost: The Total Price of Ownership
An ETF’s true cost isn’t just its sticker price (the expense ratio). It also includes the bid-ask spread—the cost to trade it. A lower total cost means more of your money stays invested. Let’s look at the all-in cost.
- The Efficiency Leaders:SCHY and LVHI are both highly liquid, boasting an average trading spread of just 4 basis points (0.04%). This makes them very cheap to get in and out of.
- SCHY combines this with its rock-bottom 0.08% expense ratio, giving it an estimated annual cost of ownership around 0.12%. It’s the clear winner on total cost.
- LVHI, despite its higher 0.40% expense ratio, is still very efficient to trade, making its liquidity a key feature for large institutional buyers who prioritize low transaction costs.
- The High-Cost Specialist: IDVO comes with a much wider average spread of 21 basis points (0.21%). When you add that to its 0.66% expense ratio, the total annual cost to hold and trade jumps to approximately 0.87%. This premium price reflects its active, options-based strategy and is a significant factor to consider.
Exposure & Strategy: The Secret Recipe
Here’s where we see the core philosophies that drive these funds.
- IDVO (The Non-Traditional Dividend Play): IDVO is an actively managed fund that uses a covered call strategy to boost its income distributions. Its portfolio is bold, with a heavy 34% allocation to Emerging Markets and a distinct tilt towards growth-oriented sectors. As an actively managed fund, it’s important to note that its managers have illustrated major shifts in holdings over time, so this profile can change.
- LVHI (The Defensive Dividend Play): LVHI tracks an index focused on two things: low volatility and high dividends. Crucially, it hedges its currency risk, protecting U.S. investors from a falling foreign currency. Its strategy results in zero exposure to Emerging Markets and a portfolio heavily concentrated in defensive sectors like Financials (24.8%) and Utilities.
- SCHY (The Dividend Core Play): SCHY is built to be a dividend core allocation. It’s important to distinguish this from a broad market-cap weighted fund; as a dividend strategy, it screens for specific characteristics and inherently carries a value tilt. It tracks an index focused on companies with consistent dividend histories and strong fundamental health, resulting in a balanced portfolio suitable for a long-term, foundational position.
Performance & Risk: How They Handle the Heat
Looking at total returns, a clear picture emerges. Here is a snapshot of the performance across key timeframes.
| Fund (Ticker) | 1-Year Return | 3-Year Return (Ann.) | 5-Year Return (Ann.) |
| IDVO | 24.46% | 28.62% | N/A |
| LVHI | 18.92% | 20.43% | 16.19% |
| SCHY | 16.88% | 10.91% | N/A |
| ACWX (Benchmark) | 17.15% | 20.89% | 10.18% |
Now let’s look at the story behind those numbers, using the 3-year risk statistics to understand how they achieved that performance.
- LVHI (Defensive Dividend): The data perfectly matches the strategy. With a downside capture of just 16.83%, it is the undisputed champion of capital preservation. Its best-in-class 3-year Sharpe Ratio of 1.65 proves its defensive posture doesn’t sacrifice performance, delivering excellent risk-adjusted returns.
- SCHY (Dividend Core): As a Dividend Core play, SCHY’s profile is about strategic participation, not extreme defense. Its market-like beta of 0.86 shows it’s built to capture market movements. While its risk metrics (104.77% downside capture, 1.19 Sharpe Ratio) aren’t designed to win on a short-term, risk-adjusted basis, they are a byproduct of its mission: to provide long-term compounding via a low-cost, high-quality portfolio.
- IDVO (Non-Traditional Dividend): The 1-year data for this newcomer reflects its aggressive, Non-Traditional Dividend nature. An immense upside capture of 114.52% shows it’s built for rallies, while a downside capture of just 32.05% reveals the buffering effect of its covered call strategy. This is a high-octane profile, but its true behavior in a prolonged bear market is yet to be fully tested.
Mystery Category: The Fundamental DNA
The fundamental metrics reveal exactly how each fund achieves its dividend goal.
- The Growth Tilt: Long-Term (LT) Earnings growth projections give a clear view into a portfolio’s orientation. Here, the Non-Traditional Dividend fund, IDVO, shows its current growth tilt with a projected LT Earnings growth of 10.32%. This is more than double the forecast for the Defensive (LVHI) and Core (SCHY) funds, which both sit at 4.21%. This confirms that IDVO’s underlying portfolio is currently built with more dynamic, growth-focused companies, though investors should remember this can change based on the active managers’ outlook.
- The Quality Marker: Return on Equity (ROE) is a key quality metric. SCHY’s high ROE of 18.22% is the fundamental proof behind its strategy, solidifying its role as a high-quality Dividend Core holding.
- The Valuation Angle: The Price/Earnings (P/E) Ratio tells a valuation story. The low-volatility screen used by the Defensive Dividend fund, LVHI, naturally leads it to less expensive stocks, resulting in the lowest P/E of the group at 13.09.
Conclusion: Choose Your Dividend Flavor
These three ETFs offer distinct takes on international dividend investing:
- The Non-Traditional Dividend (IDVO): This flavor is for investors who appreciate an active management style and a non-traditional approach to generating income. Its covered call strategy has delivered a solid track record of high distributions and strong recent performance.
- The Defensive Dividend (LVHI): This flavor is designed as a low-volatility income generator. Its focus on stable companies and its currency hedge make it a compelling option for investors seeking a more defensive international dividend exposure.
- The Dividend Core (SCHY): This flavor offers a diversified dividend play with a distinct quality tilt. Its low cost and fundamentally-screened portfolio make it a strong candidate for a core, long-term allocation to international dividend-paying stocks.
The right choice depends entirely on your goals, risk tolerance, and what role you want the investment to play in your overall portfolio.
See the Full Picture
This analysis was based on a detailed fund comparison report that dives even deeper into holdings, fundamentals, and risk metrics. Want to see the full report and run your own comparisons?
Create a free account on our platform today to unlock our full suite of institutional-grade ETF analysis tools!
Disclosures
This material is for informational purposes only and should not be considered investment advice. All investments, including ETFs, involve risk, including the possible loss of principal. Investors should consider their investment objectives, risks, charges, and expenses carefully before investing.
This analysis was developed by the team at ETF Action. We leverage advanced AI tools to assist in the drafting and refinement of our content, based on our expert prompts, direction, and final review.
