Exchange-traded funds (ETFs) have many appealing features, from low costs to transparent portfolios. But common ETF strategies can’t discriminate between the best, most sustainable and most climate-friendly companies and the rest. Enter FlexShares, which builds ETF portfolios using a proprietary flexible indexing process. Two FlexShares ETFs, currently available to investors in Ireland, United Kingdom, the Netherlands, Germany and Sweden, apply this innovative approach.
- FlexShares Developed Markets High Dividend Climate ESG UCITS ETF (QDFD)
- FlexShares Developed Markets Low Volatility Climate ESG UCITS ETF (QVFD)
The power of resilient portfolios
Major global events from the pandemic to natural disasters have driven home the value of portfolio resilience. FlexShares’ new funds offer time-tested approaches for protecting equity portfolios:
- High-dividend stocks provide income that can help to stabilize returns when markets are turbulent.
- Low-volatility stocks tend to hold up better than more-aggressive shares during downturns.
Past performance does not predict future returns
Addressing unnecessary risks
Other ETFs that focus on these strategies may be built in ways that amplify certain risks. For example, traditional high-dividend and low-volatility strategies often rely heavily on shares of utility companies. That kind of concentration in a single sector can be risky in its own right. What’s more, many investors are wary of investing in companies that could be especially exposed to climate-related risks—and utility companies fall squarely in that category.
Likewise, high-dividend approaches often hold large weights in traditional energy companies, which may be at risk as the world transitions away from fossil fuels.
FlexShares specializes in addressing problems like these. The company offers carefully designed, intelligent ETFs, backed by the strength and expertise of Northern Trust Asset Management—part of a 132-year-old global financial services firm with over $1 trillion in total assets under management.*
Making indexing flexible
An innovative approach to portfolio construction called flexible indexing makes these ETFs possible. FlexShares partners with a variety of index providers to build products that address a defined index need. Then the company may use a proprietary scoring systems such as Northern Trust quality score and the Northern Trust ESG score. This enables FlexShares to offer funds with the potential for reduced risk and sustainable long-term returns.
Resilient portfolios that control for quality and climate
Resilience demands flexibility. FlexShares’ uniquely flexible approach to building ETFs helps investors strengthen their equity portfolios, putting them in position to navigate the market’s risks while continuing to pursue their goals.
To find out more, click here.
*31 December 2020. Northern Trust Asset Management.
Issued by Northern Trust Global Investments Limited, which is authorised and regulated by the Financial Conduct Authority, (FCA).
IMPORTANT INFORMATION Investing involves risk – no investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. The value of your investment may fluctuate and you may not get out what you put in. Past performance does not guarantee future results. This information does not constitute investment advice or a recommendation to buy or sell any fund or security and does not take into account an investor’s individual circumstances.
For legal and regulatory information about our offices and legal entities visit flexshares.com/disclosures.
Northern Trust Fund Managers (Ireland) Limited is the management company of the Flexshares ICAV, the fund and its sub-funds are regulated collective investment schemes in Ireland under Central Bank of Ireland UCITS regulations.
FlexShares Developed Markets Low Volatility Climate ESG UCITS ETF (QVFD) and the FlexShares Developed Market High Dividend Climate ESG UCITS ETF (QDFD) are registered for marketing and sales in Ireland, United Kingdom, the Netherlands, Germany and Sweden.
Northern Trust Asset Management is composed of Northern Trust Investments, Inc. Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, K.K, NT Global Advisors, Inc., 50 South Capital Advisors, LLC, Belvedere Advisors LLC and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company. ©2021 Northern Trust Corporation. Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A.
The iSTOXX® Northern Trust Developed Markets High Dividend Climate ESG Index and iSTOXX® Northern Trust Developed Markets Low Volatility Climate ESG Index are the intellectual properties (including registered trademarks) of STOXX® Limited, Zurich, Switzerland and/or its licensors (“Licensors”), which is used under license. The securities based on the Index are in no way sponsored, endorsed, sold or promoted by STOXX® and its Licensors and neither of the Licensors shall have any liability with respect thereto.
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