Northern Trust Returns to ETF Business, Launches FlexShares | ETF Trends

Almost three years after closing shop in exchange traded funds, Northern Trust returned to the ETF market last week, launching four FlexShares funds.

“FlexShares represent Northern Trust’s global expertise in asset management, investment solutions and risk management,” Shundrawn Thomas, head of Northern Trust’s Exchange Traded Funds Group, said in a press release. “With $684 billion in assets under management, Northern Trust has deep connections to sophisticated investors, and FlexShares reflect our insights into investor needs in an evolving marketplace.”

Two FlexShares ETFs focus on equities and are based on Morningstar equity indices, whereas the other two focus on Treasury-protected inflation securities (TIPS) and are based on the Markit iBoxx fixed income indices.

The four new funds include:

  • FlexShares Morningstar U.S. Market Factor Tilt Index Fund (NYSEArca: TILT). TILT emphasizes the long-term growth potential of small-cap and value stocks. The fund has an expense ratio of 0.27%.”Morningstar’s index captures 99.5 percent of the U.S. market,” Thomas said. “With a rules-based tilt toward small cap and value, the FlexShares Morningstar U.S. Market Factor Tilt Index ETF counterbalances the inherent bias toward large-growth companies embedded in market-weighted mutual funds.”
  • FlexShares Morningstar Global Upstream Natural Resources Index Fund (NYSEArca: GUNR). GUNR tracks emerging and developed markets that are engaged in the owership, management or production of natural resources. The fund has an expense ratio of 0.48%.”Exposure to natural resource commodities is an investment strategy tool for investors to participate in the rising prices of raw materials because of increased global demand,” Thomas commented. “At a time when natural resources are gaining in strategic importance to nations, companies and investors, an allocation to these assets can be a useful component of a diversified investment portfolio.”
  • FlexShares iBoxx 3-Year Target Duration TIPS Index Fund (NYSEArca: TDTT). TDTT tracks TIPS with a targeted duration of three years. The fund has an expense ratio of 0.20%.
  • FlexShares iBoxx 5-Year Target Duration TIPS Index Fund (NYSEArca: TDTF). TDTF tracks TIPS with a targeted duration of five years. The fund has en expense ratio of 0.20%.”The FlexShares TIPS ETFs precisely target TIPS durations, seeking to provide investors with more efficient inflation-hedging strategies than market-weighted investment products,” Thomas said. “Using indexes developed by Markit, these are the first ETFs to offer investors a passively managed, liquid investment vehicle that effectively removes duration variability in a TIPS portfolio.”

For more information on new ETFs, visit our new ETFs category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.