Northern Trust has expanded its line-up of FlexShares exchange-traded funds (ETF) with the launch of three dividend-oriented equity funds that pursue income potential and long-term capital growth from a universe of international stocks.
Shundrawn Thomas, head of Northern Trust’s ETFs Group.
The new funds complement the provider’s existing ‘quality dividend’ suite, adding exposure to international developed and emerging markets, creating a diversified set of strategies from which to choose within the FlexShares ETFs family.
By combining quality factors – the funds employ Northern Trust’s proprietary Dividend Quality Score (DQS) – with the search for yield, the funds may help equity investors achieve an attractive dividend yield and income stream while controlling for various levels of market risk.
The DQS encompasses measurements of management efficiency, profitability and cash flow – three factors that are typically more reliable predictors of dividend quality than rudimentary historical metrics like dividend growth.
While the ETFs strive to meet their investment objective by focusing on quality and yield, each has a slightly different approach to market volatility or beta:
FlexShares International Quality Dividend Index ETF (IQDF)
Pursues a beta similar to that of the market while mitigating sector, industry and security concentration risks.
FlexShares International Quality Dividend Defensive Index ETF (IQDE)
Pursues a beta less than the market while mitigating sector, industry and security concentration risks.
FlexShares International Quality Dividend Dynamic Index ETF (IQDY)
Pursues a beta greater than the market while mitigating sector, industry and security concentration risks.
Shundrawn Thomas, head of Northern Trust’s Exchange Traded Funds Group, said: “With the prior introduction of our domestic series of QDF funds, we were able to deliver a set of income generation strategies that could be applied to portfolios with a range of risk tolerances.”
He added: “Income remains a key consideration for individual and institutional investors alike, and geopolitical, regulatory and market structure changes are driving a clear evolution in this area. Now with the release of our international series of QDF funds, we believe FlexShares is positioned as a global leader in this category.”
The funds have been listed on the NYSE Arca with a net expense ratio of 0.47%.