Investors are always looking for better ways to reduce risk and increase returns. There is growing demand for more simplicity, more transparency, and improved cost efficiency. We believe that this demand may be one of the reasons ETF shares replaced individual stocks as the most actively traded securities in the market. In 2016, FlexShares listed three new funds targeting specific investor needs:
- FlexShares STOXX® US ESG Impact Index Fund (NASDAQ-listed, Ticker: ESG)
- FlexShares STOXX® Global ESG Impact Index Fund (NASDAQ-listed, Ticker: ESGG)
- FlexShares Core Select Bond Fund (NYSE-listed, Ticker: BNDC)
ESG and ESGG are engineered to offer investors unique opportunities for socially responsible investing (SRI). FlexShares uses the latest data science techniques to combine key performance indicators (KPIs) in each of the environmental, social, and governance buckets that have been historically most influential in improving risk-adjusted returns. With these funds, we aim to link sustainability policies with the volatility of underlying share prices. Learn more about the Case for ESG here.
BNDC is our new strategic beta bond ETF, designed for investors interested in the possibility of total return and preservation of capital. The fund portfolio, based on Northern Trust`s forecast, implements active, top-down decisions, primarily using passively managed, rules-based fixed-income sector ETFs. FlexShares actively manages the BNDC fund, adjusting to potential changes in interest rate levels, the shape of the yield curve, and credit spread relationships, while emphasizing liquidity and diversification. Read about how BNDC may fit into your portfolio here.
We are proud to remain a leader in the strategic beta funds segment. In fact, 23 of our 25 funds track alternatively weighted indices. Clients may benefit from our dedication to advancing the science of index design and selecting actively managed strategies. Investors can choose the asset class and exposure type according to their portfolio needs.
To deliver sophisticated yet simple tools, FlexShares relies on both hard-won experience and innovation. Our researched, empirically- driven approach to product development is focused on investors' needs. Learn more about our commitment to helping investors achieve their goals with innovation, education, and thought leadership in President's Perspectives.
To learn more about the state of the ETF industry, read the 2017 President's Perspective.
Shundrawn A. Thomas, President of FlexShares
FlexShares Core Select Bond Fund (BNDC) is actively managed and does not seek to replicate a specified index. The Fund is subject to increased credit and default risk, where there is an inability or unwillingness by the issuer of a fixed income security to meet its financial obligations, debt extension risk, where an issuer may exercise its right to pay principal on an obligation later than expected, as well as interest rate/maturity risk, where the value of the Fund's fixed income assets will decline because of rising interest rates. The Fund is subject to increased underlying fund risk, where the Fund's investment performance and its ability to achieve its investment objective may be directly related to the performance of the Underlying Funds in which it invests. The Fund may also be subject to increased concentration risk as it may invest more than 25% of its assets into the securities of a single developed market. Additionally, the Fund may invest without limitation in mortgage or asset-backed securities, which puts it at increased risk for interest rate/maturity risk, debt extension risk, and prepayment (or call) risk.
FlexShares STOXX® US ESG Impact Index Fund (ESG) and the FlexShares STOXX® Global ESG Impact Index Fund (ESGG) are passively managed and use a representative sampling strategy to track their underlying index respectively. Use of a representative sampling strategy creates tracking risk where the Fund's performance could vary substantially from the performance of the underlying index. The Funds are subject to environmental, social and governance (ESG) Investment Risk, which is the risk that because the methodology of the Underlying Indices selects and assigns weights to securities of issuers for non-financial reasons, the Funds may underperform the broader equity market or other funds that do not utilize ESG criteria when selecting investments. The Funds are also at increased risk of industry concentration, where it may be more than 25% invested in the assets of a single industry. For ESGG, investments in foreign market securities involve certain risks such as currency volatility, political and social instability and reduced market liquidity. The Funds may also invest in derivative instruments. Changes in the value of the derivative may not correlate with the underlying asset, rate or index and the Funds could lose more than the principal amount invested.
The STOXX® USA ESG Impact Index and the STOXX® Global ESG Impact Index are the intellectual property (including registered trademarks) of STOXX® Limited, Zurich, Switzerland and/or its licensors ("Licensors"), which is used under license. The securities based on the Index are in no way sponsored, endorsed, sold or promoted by STOXX® and its Licensors and neither of the Licensors shall have any liability with respect thereto.