Northern Trust’s FlexShares Exchange Traded Funds added to its fixed-income ETF roster with the FlexShares High Yield Value-Scored Bond Index Fund (NYSE: HYGV) that utilizes a unique screener for high-yield corporate debt.
As opposed to a strategy of the increasingly popular multi-factor ETFs that use various screening methodologies to locate opportunities, HYGV hones in on value with a proprietary credit scoring model that maximizes factor inputs for value while at the same time, effectively screens for quality and liquidity risk. The bond issuers are then fundamentally evaluated against current market conditions, with low-quality issuers precluded from the index.
“As high yield bonds have become a mainstream fixed-income asset, we believe fund providers have sacrificed their original focus on yield generation,” said Mark Carlson, Senior Investment Strategist at FlexShares. “Our new value-scored high yield fund offers investors an innovative approach to income generation by focusing on maximizing the value factor to enhance total return potential, while also placing a renewed focus on the ‘yielding’ aspect of high yield.”
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FlexShares Fixed-Income-Offerings
HYGV will add to a current FlexShares ETFs roster that includes other fixed-income offerings, such as their FlexShares Core Select Bond ETF (BNDC) and FlexShares Ready Access Variable Inc ETF (RAVI). FlexShares ETFs options include funds that focus on capital appreciation, risk management, income generation, and liquidity management.
“The addition of the FlexShares High Yield Value-Scored Bond Index Fund will enhance our suite of efficient fixed-income funds, providing investors a diverse set of income generating products within the FlexShares lineup,” said Darek Wojnar, Head of Northern Trust’s Funds and Managed Accounts Group. “We believe our deep fixed-income expertise and selective approach to product development will help our clients meet their investment goals and potentially deliver income in a dynamic market environment where traditional income sources have become less predictable.”
Related: AdvisorShares Debuts New Micro Cap, Short ETFs
Fixed-income ETFs are increasingly attracting the attention of investors looking for diversification, regular income generation and risk averse options. In April 2018, fixed-income ETFs saw record inflows of $15.3 billion, bringing total fixed-income ETF assets to about $600 billion. In addition, inflows into fixed-income ETFs beat equity inflows in the second quarter, seizing control of a U.S. ETF industry with $3.6 trillion in assets.
Northern Trust positions itself as a global leader in wealth management, asset management and asset servicing services for high net worth individuals. As of June 30, 2018, Northern Trust has $10.7 trillion in assets under custody/administration, $8.1 trillion in assets under custody, $1.1 trillion in assets under management, and $135 billion in banking assets.
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