The FlexShares Credit‐Scored US Long Corporate Bond Index Fund (NasdaqGM: LKOR) also began trading Thursday. LKOR tracks a fixed-income portfolio of corporate debt securities with a longer maturity selected based on a proprietary credit evaluation process. The ETF has a 0.22% expense ratio.
“A combination of market structure and regulatory changes has caused investors to reassess their investment options for long-term credit exposure,” Thomas said in a press release. “The FlexShares Credit‐Scored US Long Corporate Bond Index Fund provides investors with a contemporary approach to optimizing credit risk, with improved transparency and liquidity relative to legacy corporate bond benchmarks.”
LKOR excludes illiquid and smaller issuers to improve liquidity and transparency. Additionally, the fund targets company bonds that have a higher credit quality, lower risk of default and potential for higher yield and price appreciation. However, the bond fund targets longer dated corporate debt, with an effective duration of 13.28 years.
The bond fund’s quality break down includes investment-grade AAA 2.0%, AA 14.8%, A 36.6% and BBB 46.7%.
Sectors include industrial 23.6%, consumer 20.8%, energy 19.0%, financials 18.5% and technology & telecom 18.1%.
For more information on new fund products, visit our new ETFs category.
Max Chen contributed to this article.