Northern Trust’s FlexShares has rolled out an actively managed ETF to help investors adapt to a changing interest rate environment ahead.
FlexShares launched the FlexShares Core Select Bond Fund (NYSEArca: BNDC) on Monday. BNDC comes with a 0.35% net expense ratio.
Bradley Camden, Senior Vice President of Northern Trust Investments, Brandon P. Ferguson, Second Vice President of Northern Trust Investments, and Daniel J. Personette, Vice President of Northern Trust Investments, will manage the new active ETF.
The new fund will try to provide attractive risk-adjusted performance by investing in a portfolio of fixed-income securities and is designed to achieve optimal potential for return, according to the prospectus. Moreover, the active component will adjust to potential changes in interest rate levels, the shape of the yield curve and credit spread relationships while emphasizing liquidity and diversification.
As the ETF manages its exposure to interest-rate risks, the fund managers may take short or long positions in U.S. Treasury futures or transact in interest rate swaps, along with interest rate futures contracts.
BNDC will act as a type of fund-of-funds, largely investing in U.S. dollar-denominated investment-grade fixed-income securities through ETFs and other registered investment companies. The active ETF will be exposed to U.S. governments and their agencies, instrumentalities or sponsored enterprises, and U.S. and non-U.S. private-sector entities, like corporations and banks.
The underlying portfolio is based on Northern Trust’s forecast, which is based on over 40 years of fixed-income investing experience.
Current holdings include , FlexShares Disciplined Duration MBS Index Fund (NasdaqGM: MBSD) 34.4%, FlexShares Credit‐Scored US Corporate Bond Index Fund (NasdaqGM: SKOR) 27.9%, iShares 3-7 Year Treasury Bond ETF (NYSEArca: IEI) 15.2%, FlexShares Credit‐Scored US Long Corporate Bond Index Fund (NasdaqGM: LKOR) 14.2%, iShares 7-10 Year Treasury Bond ETF (NYSEArca: IEF) 4.3%, iShares 20+ Year Treasury Bond ETF (NYSEArca: TLT) 1.4%, FlexShares iBoxx 3-Year Target Duration TIPS Index Fund (NYSEArca: TDTT) 1.3% and FlexShares iBoxx 5-Year Target Duration TIPS Index Fund Profile (NYSEArca: TDTF) 1.3%.
For more information on new fund products, visit our new ETFs category.