FlexShares, the exchange-traded fund business of Northern Trust, expanded its lineup of factor-based ETFs with Tuesday’s roll out of a suite of three products that combine quality and low volatility.
The FlexShares US Quality Low Volatility Index Fund (QLV), FlexShares Developed Markets ex-US Quality Low Volatility Index Fund (QLVD) and FlexShares Emerging Markets Quality Low Volatility Index Fund (QLVE) all employ a quality screen on their respective universe of equities that emphasizes profitability, management efficiency and cash flow. The bottom 20 percent of stocks with the lowest quality scores are excluded, and remaining equities are filtered through regional, sector and risk-factor constraints to avoid unintended style factor exposures, undue sector concentration and high turnover.
The resulting indexes for each fund aim to target high-quality companies with lower absolute risk in an attempt to mitigate future volatility.
Both the U.S. and the developed markets ex-U.S. products are primarily large-cap vehicles, while the emerging-markets fund is more evenly distributed with large-cap securities comprising a little more than half of the fund.
The U.S.-focused ETF has a net expense ratio of 0.22 percent, while the products invested in developed markets and emerging markets charge 0.32 percent and 0.40 percent, respectively.
FlexShares now has 29 ETFs, including a large number of products geared toward individual factors, factor combinations and factor tilting. It has aggregate assets under management of $15.9 billion, according XTF.com.