NYLI Candriam International Equity ETF (IQSI)

IQSI (NASDAQ: IQSI) is an exchange-traded fund that provides exposure to equities in developed markets outside North America — Europe, Japan, Australia, and other industrialised economies — filtered through a lens that emphasizes environmental, social, and governance (ESG) criteria. It sits at the intersection of international diversification and the belief that better-governed companies with lower environmental risks tend to outperform.

IQSI — key facts

International equities offer diversification outside the U.S. market and exposure to developed economies across Europe and Asia.


Universe	Developed markets ex-USA and Canada
Index approach	Large-cap and mid-cap with ESG screening
Number of holdings	Typically 100+ stocks
Sponsor	NYLI (New York Life) / Candriam
Expense ratio	Moderate (typically 0.50% or less)
Dividend yield	Varies by market cycle; often higher than U.S. equities
Currency exposure	Unhedged (investors see full foreign-exchange moves)

The case for international developed markets

The United States represents roughly 60% of global equity market capitalization, which means that a fully domestic portfolio leaves vast, profitable businesses out of the picture. Europe, Japan, Switzerland, Australia, and other developed markets are home to some of the world’s most durable companies — consumer-goods giants, energy majors, pharmaceutical innovators, luxury houses, and industrial manufacturers. Many of these businesses are older, more mature, and more dividend-yielding than their American counterparts; some compete globally; and all of them move somewhat independently from U.S. market cycles.

IQSI exists to give an investor exposure to that universe without the homework of picking individual foreign stocks or managing currency risk explicitly. It is a diversified bundle of international equities, weighted by market capitalization (larger companies get larger positions) and filtered for quality and sustainability characteristics.

How Candriam applies ESG screening

The fund uses Candriam’s proprietary ESG assessment to narrow the universe of available stocks. The screening process evaluates:

Environmental: carbon emissions, waste and water management, climate transition risk
Social: labour practices, diversity, supply-chain oversight, community relations
Governance: board independence, executive compensation, shareholder rights, corruption and anti-bribery compliance

Companies that score well on these dimensions are weighted more heavily; those with material risks or poor track records are reduced or excluded. The filter is not absolute — IQSI does not eliminate entire sectors — but it tilts the portfolio toward what Candriam believes are the better-managed, lower-risk businesses.

The logic is twofold: first, that ESG risks (environmental liabilities, labour disputes, regulatory penalties) are financial risks, and companies that manage them well tend to outperform; second, that investing behind ESG criteria aligns capital with sustainable practices and creates incentive for better corporate behaviour. An investor in IQSI is implicitly voting for both propositions.

Geographic and sector distribution

The index includes major economies: the United Kingdom, Japan, Germany, France, Switzerland, and Australia are typically the largest weightings, but the portfolio spans 20+ developed markets. Sector-wise, IQSI normally holds exposure to financials (banks, insurers), industrials, consumer staples and discretionary, healthcare, energy, and utilities. The exact mix depends on which regions and which sectors score best on ESG criteria at any given rebalancing.

The weighting is market-cap weighted, meaning that larger companies in developed markets get larger allocations. This approach is transparent and mechanical — no stock-picker is choosing winners; the index simply says “take the largest companies that meet ESG standards, weight them by size.”

Dividend yield and income

International developed-market equities have historically yielded higher dividends than U.S. equities. Companies in Europe, Japan, and other regions often distribute a larger percentage of earnings as cash dividends, so IQSI typically carries a dividend yield several percentage points higher than a comparable U.S. equity fund. For an investor seeking current income from equities, that higher yield is an advantage; for one seeking total return, it is neither good nor bad, only a different mix of income and capital appreciation.

Dividends paid by foreign corporations are usually subject to withholding taxes at the source (15%–35% depending on the country and relevant tax treaties). U.S. investors see the after-tax amount; the fund manages this passively and includes the foreign tax withholding in its expense accounting. Tax-treaty benefits can reduce withholding in some cases, though the details are complex and country-specific.

Currency exposure and volatility

IQSI is unhedged, meaning investors experience the full effect of foreign-exchange movements. If the U.S. dollar weakens, international stocks become more valuable when converted back to dollars — a tailwind. If the dollar strengthens, the reverse happens — a headwind. Over long periods, currency moves are somewhat random and tend to average out, but in any given year or market cycle, currency can add or subtract several percentage points from returns.

For investors who want to eliminate currency risk, some international funds offer hedged versions that lock in the exchange rate. IQSI does not, so owning it means accepting currency fluctuation as part of the return profile.

Expenses and liquidity

IQSI’s expense ratio is moderate — typically around 0.40%–0.60% for an actively-screened international fund. The underlying index is not free to maintain (ESG screening requires ongoing research and assessment), and Candriam’s methodology adds costs. The fund is reasonably liquid, trading millions of shares per day, so spreads are tight for retail investors.

Who holds this fund

IQSI is designed for:

Investors seeking diversification away from the U.S. market but want exposure to stable, developed economies (not emerging markets)
Those who believe ESG-screened companies are better-managed and will outperform peers with lower ESG standards
Investors comfortable with currency exposure and the resulting fluctuations in value
Those seeking higher dividend income than typical U.S. equity funds offer
Advisers building globally diversified portfolios who want one fund to cover the international developed-market sleeve

It is not appropriate for currency-sensitive investors (those who expect the dollar to strengthen sharply and want to avoid that impact), nor is it a hedge or defensive position — international equities carry substantial volatility and can move with or against U.S. stocks depending on global economic cycles.

Research and monitoring

The fund’s prospectus details Candriam’s ESG methodology and the index construction rules. The fact sheet shows current holdings, regional weightings, and sector allocations. For context on international markets and their performance relative to the U.S., financial news and market data providers track major regional indices (FTSE for the UK, DAX for Germany, Nikkei for Japan). Understanding the macro backdrop — currency trends, interest-rate differentials, regional economic cycles — helps explain IQSI’s performance relative to both U.S. equities and other international funds.