Northern Trust’s (NasdaqGS: NTRS) FlexShares unit is making it easier for investors to get exposure to real assets with the new FlexShares Real Asset Allocation Index Fund (NasdaqGM: ASET), which holds three other FlexShares exchange traded funds.
ASET “seeks to provide investors with a core real assets allocation that helps address their inflation-hedging, diversification, and income needs. Designed to serve as a real assets allocation solution, the strategy applies a proprietary optimization to the three underlying funds in an effort to minimize the volatility of returns and lower risk in the fund,” according to a statement issued by FlexShares.
The new ETFs holdings are the FlexShares Global Quality Real Estate Index Fund (NYSEArca: GQRE), FlexShares STOXX Global Broad Infrastructure Index Fund (NYSEArca: NFRA) and the FlexShares Morningstar Global Upstream Natural Resource Index Fund (NYSEArca: GUNR).
In the current environment, market observers have been focusing on the swings in the oil market. Carlson points out that while prices are depressed, American producers are still pumping out more oil.
For instance, a state-mandated time limit on drilling and major oil-tax incentive in North Dakota’s Bakken oil could fuel a production spike in the region. Meanwhile, oil demand remains relatively flat after seeing an average one-and-a-half percent growth rate from 1995 through the end of 2013.
GUNR provides exposure to the rising demand for natural resources and tracks global companies in the energy, metals and agriculture sectors, while maintaining a core exposure to the timberlands and water resources sectors.
GQRE, which debuted in November 2013, tracks the Northern Trust Global Quality Real Estate Index, a fundamentally-weighted index that focuses on commercial and residential REITs. Mortgage REITs, real estate finance companies, mortgage brokers and bankers, commercial and residential real estate brokers and real estate agents and home builders are among the securities that are excluded from the index. [Rookie REIT ETF Shines]
NFRA tracks the STOXX Global Broad Infrastructure Index and includes traditional utility, energy and transportation subsectors of the infrastructure category, along with communications and government outsourcing/social infrastructure, which should help further diversify the portfolio.
Much of the developed world, including the U.S., and plenty of emerging economies have vast infrastructure needs that will require trillions of dollars of expenditures in the coming years.
Investors can capitalize on that trend with an increasing number of internationally focused exchange traded funds. Fortunately for conservative investors, playing the global infrastructure theme does not mean having to incur the increased volatility of a pure emerging markets fund because several global infrastructure ETFs feature deep developed markets exposure. [ETFs for Increased Infrastructure Spending]