FlexShares, the ETF unit of Chicago-based bank Northern Trust,
today is launching three dividend-focused equities funds, all of
which the company is looking to self-index.
The income-oriented portfolios, each tracking a member of the
Northern Trust Quality Dividend index family, are each long-only
equities baskets that pick securities based on expected dividend
payments and fundamental factors such as profitability, solid
management and reliable cash flow, the company said on its website.
- The FlexShares International Quality Dividend Index Fund
- The FlexShares International Quality Dividend Defensive Index
- The FlexShares International Quality Dividend Dynamic Index
They are all designed to provide exposure to long-term growth
potential of international securities and deliver dividend income,
the company said on its website. IQDF, IQDE and IQDY each cost a
net of 0.47 percent in expense ratio.
The nomenclature of the funds speaks to targeted volatility,
with the "Quality Dividend" name indicating that volatility of the
funds' holdings will be in line with the index. "Dynamic" and
"Defensive" meanwhile suggest that volatility will be above and
below each respective index.
The launches are timely given that investors continue to pour
assets into dividend-focused strategies as they look for income
alternatives at a time of paltry yields on traditional fixed-income
instruments such as government bonds. Inflows into payout-rich
have easily topped $60 billion in the past year, according to data
compiled by IndexUniverse.
The funds will join three similar strategies, albeit
U.S.-focused, the company launched back in December.
Both IQDF and IQDE allocate just over half of their portfolios
to large-cap names, with the U.K., Japan and Australia their
largest single-country allocations, respectively. The funds are
nearly 30 percent tied to financials, with 11 percent linked to
IQDY, meanwhile, has 60 percent of the portfolio allocated to
large-cap names, and while financials represent nearly 30 percent
of the mix as well, industrials are the second largest sector
allocation at 13.8 percent of the portfolio.
Northern Trust's ETF unit has $4.69 billion in assets under
management, making it the 16
-largest U.S. ETF provider today.
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