Inflation has been a defining theme this year, but ESG has maintained its place on the center stage, each heavily influencing investors’ allocation decisions.
FlexShares, managed by Northern Trust Asset Management, has more than 30 funds in its ETF lineup, offering a range of core ESG products and income-generating funds that can stand up to the current economic environment.
ETF Trends’ editor-in-chief Lara Crigger sat down with FlexShares’ head of funds & managed accounts, Darek Wojnar, to discuss these defining themes for this edition of “ETF Leaders Powered by the NYSE.”
Wojnar’s Take on Inflation
Wojnar said he thinks all investors – under all circumstances – should think about inflation when preparing their portfolio, with it being particularly important in the current environment.
“We’ve seen a very interesting response from investors who engage with [FlexShares],” Wojnar said. “We have a lineup that includes many funds that particularly [play well]as a strategic hedge for inflation or, in some cases, a tactical hedge for inflation.”
Wojnar said an example is the FlexShares Morningstar Global Upstream Natural Resources Index Fund (GUNR), a highly diversified play on upstream resources, including energy, metals, agriculture, timber, and water.
“We also have quite a few funds playing a different role,” Wojnar said. “So, for example, TIPS (treasury inflation-protected securities) with very much targeted duration, investors utilize them both tactically and strategically.”
Wojnar’s Current Perspective on the ESG Space
Broadly, as Northern Trust Asset Management, the firm has been working with investors around the globe and has been focused on sustainability and ESG matters for more than a decade, according to Wojnar.
“We’re one of the leaders with more than $130 billion of assets managed in some fashion and form with some components of ESG thinking,” Wojnar added.
Wojnar said one aspect the firm discovered over the course of those years is that investors have access to many sources of information and data – prompting the question of how you process it all in a sensible way for investors?
“Northern Trust developed a scoring mechanism that leverages and incorporates many of these inputs,” Wojnar said. “The Northern Trust Vector Score utilizes both SASB (Sustainable Accounting Standards Board) inputs as well as TCFD [Task Force on Climate-Related Financial Disclosures].”
Wojnar said that allows the firm to create portfolios that represent markets.
“We have an offering of…core funds that represent U.S. equities, developed markets equities, but also credit and high yield fixed income securities, that really leverage this vector score to achieve that portfolio that represents the market but improves on sustainability measures.”
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