Northern Trust’s FlexShares® Exchange Traded Funds announced today the launch of its Quality Low Volatility suite of three funds, the FlexShares: US Quality Low Volatility Index Fund (NYSE:QLV); Developed Markets ex-US Quality Low Volatility Index Fund (NYSE:QLVD); and Emerging Markets Quality Low Volatility Index Fund (NYSE:QLVE).
The FlexShares Quality Low Volatility Index Funds utilize a quality screen in an effort to provide exposure to high-quality companies with lower absolute risk, thereby limiting potential future volatility. The quality screen analyzes a broad universe of equities based on key indicators such as profitability, management efficiency, and cash flow, and then excludes the bottom 20% of stocks with the lowest quality score. The index is then subject to regional, sector and risk-factor constraints, in order to manage unintended style factor exposures, significant sector concentration, and high turnover.
“We are delighted to offer investors the next evolution of low volatility-based strategies,” said Christopher Huemmer, Senior Investment Strategist at FlexShares. “Existing low-volatility strategies often rely exclusively on historical return data and fail to account for future price fluctuations and unintended risks. Our quality-focused approach addresses these flaws in an effort to provide a more efficient means of accessing the low volatility factor.”
Low volatility strategies have come to the forefront of investor interest amid increased volatility stemming from market swings. According to Morningstar, in the first four months of the year, funds trying to mitigate risk raised nearly $10 billion. While this is the first quality low volatility fund for FlexShares, in 2014 Northern Trust Asset Management introduced its first high quality, low volatility strategy and now has three.
“Recent market swings have put a spotlight on the need for strategies that can potentially help in an era of investor uncertainty,” said Darek Wojnar, Head of Funds and Managed Accounts at Northern Trust Asset Management. “We have leveraged years of experience in equities research and our track record in quality low volatility strategies to construct the Quality Low Volatility ETF suite, which we believe can reduce portfolio risk and provide competitive performance for our clients.”
FlexShares Exchange Traded Funds are designed to pursue specific investment goals across both passive and active strategies. FlexShares offers differentiated ETF strategies that can improve and simplify the investment decision process for the long-term investor. As of July 1, 2019, assets under management were 15.8 billion. Follow us on Twitter @FlexSharesETFs.
About Northern Trust
Northern Trust Corporation (NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 20 U.S. states and Washington, D.C., and across 23 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of March 31, 2019, Northern Trust had assets under custody/ administration of US$10.9 trillion, and assets under management of US$1.2 trillion. For more than 125 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit northerntrust.com or follow us on Twitter @NorthernTrust.
Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at http://www.northerntrust.com/disclosures.
Before investing, carefully consider the FlexShares investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained by visiting www.flexshares.com. Read the prospectus carefully before you invest.
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An investment in FlexShares is subject to numerous risks, including possible loss of principal. Fund returns may not match the return of the respective indexes. The Funds are subject to the following principal risks: asset class; commodity; concentration; counterparty; currency; derivatives; dividend; emerging markets; equity securities; fluctuation of yield; foreign securities; geographic; income; industry concentration; inflation-protected securities; infrastructure-related companies; interest rate / maturity risk; issuer; large cap; management; market; market trading; mid cap stock; MLP; momentum; natural resources; new funds; non-diversification; passive investment; privatization; small cap stock; tracking error; value investing; and volatility risk. A full description of risks is in the prospectus.
The FlexShares US Quality Low Volatility Index Fund (QLV), FlexShares Developed Markets ex-US Quality Low Volatility Index Fund (QLVD) and the FlexShares Emerging Markets Quality Low Volatility Index Fund (QLVE) are passively managed and use a representative sampling strategy to track their underlying indexes. Use of a representative sampling strategy creates tracking risk where the Fund’s performance could vary substantially from the performance of the underlying indexes along with the risk of higher portfolio turnover. Although the funds seek lower volatility than their broader respective markets, there is no guarantee they will be successful as securities or other assets in the Fund’s portfolio may be subject to greater price volatility than the market as a whole. Foreign and emerging market securities involve certain risks such as currency volatility, political and social instability and reduced market liquidity. The Funds may also invest in derivative instruments. Changes in the value of the derivative may not correlate with the underlying asset, rate or index and the Funds could lose more than the principal amount invested. The Funds are also is at increased risk of Industry Concentration, where it may be more than 25% invested in the assets of a single industry.