IQDF aims to hold a basket of dividend-paying firms with stable returns that has beta similar to the Northern Trust International Large Cap Index (Parent Index). The index has a large-cap bias resulting from selecting its constituents from the parent index, but it may also invest in mid-cap stocks. The index selects firms that meet certain targets for dividend yield and other fundamental factors. Securities ranking in the lowest quintile of quality and non-dividend paying firms are excluded. Quality is scored using a proprietary methodology based on management expertise (e.g. corporate finance activities), profitability, and cash flow. The remaining securities are optimized and weighted based on quality, dividend yield, and beta similar to the Parent Index. The Index is reconstituted quarterly starting each February.
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