Investors’ risk-off sentiment continued through May, with concerns focused on inflation, monetary tightening, and geopolitical tensions.
Equity ETFs saw a combined $32.4 billion and fixed income ETFs saw $33.7 billion in May inflows.
Three funds in particular in FlexShares’ ETF range saw impressive inflows as investors looked for defensive strategies and funds that offer generous income.
The FlexShares Morningstar Global Upstream Natural Resources Index Fund (GUNR) took the top spot for the second month in a row. GUNR, which ended the month with $8.9 billion in assets under management, took in $376 million in May inflows, according to VettaFi.
The fund took in $280 million in net inflows in April and $974 million in year-to-date inflows, according to VettaFi, as investors look to hedge inflation with real assets exposure.
GUNR is one of the more unique products in the Commodity Producers Equities ETF Database category. The fund focuses on the “upstream” portion of the natural resources supply chain, maintaining meaningful exposure to the water and timber industries along with positions in companies engaged in energy production, metals extraction, and agriculture.
GUNR is tilted heavily towards mega-cap stocks, including big oil and major mining firms. GUNR can help investors gain “indirect” exposure to commodity prices. Because the profitability of the component stocks tends to move in unison with the spot prices of the underlying resources, this fund should perform well when natural resource prices are on the rise.
The FlexShares Quality Dividend Index Fund (QDF), new to the leaderboard, saw $133 million in May inflows, bringing its year-to-date inflows to $125 million, according to VettaFi.
QDF, which has $1.8 billion in assets under management, follows a Northern Trust index that selects dividend-paying large-cap U.S. equities. The index then weights the portfolio toward companies that earned the highest “dividend quality” scores. To prevent unintentional concentrations, the methodology caps the weighting of individual securities, industry groups, sectors, and styles.
The fund aims to deliver “market-like beta,” meaning, QDF tries to match market volatility.
The FlexShares Ready Access Variable Income Fund (RAVI) held its spot in third place, taking in $39 million in net inflows for the month. The fund, which has $688 million in assets under management, has seen $275 million in year-to-date inflows, according to VettaFi.
RAVI is one of several short-term debt funds marketed to investors who want to preserve capital while wringing out a bit more income than they can get from Treasuries. The Northern Trust portfolio team behind RAVI looks for short-term investment-grade debt, including public and private securities from U.S. and non-U.S. issuers.
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