How to Effectively Educate Your Bigger is Better Clients About the FlexShares ETF Difference

Posted by FlexShares on Jun 5, 2017 9:04:11 AM


We believe FlexShares ETFs beneficial investor offerings include our growing innovative fund product lineup. Partnering with seasoned index investment professionals using quantitative research, our alternatively weighted indices and mixedasset classes provide investors with funds that are designed to help meet a variety of investor financial goals.

Combining our industry expertise with Northern Trust's 125-year reputation as a highlyregarded institutional wealth manager, we believe helps to generate confidence in all our products, regardless of their individual fund size.

But for many investors their most objective measure is quantitative—size. As we discussed in a previous blog post - larger funds may appear to be potentially higher performing, leading the investor to believe that higher returns are possible simply due to their size.

We believe that limited perspective may come due to some investors viewing ETFs as essentially identical to mutual funds, which has historically been marketed and perceived as "bigger is better, " a circumstance in which higher assets under management (AUM) can lead to improved performance. Investors may maintain that position even after accounting for principal differences between ETFs and mutual funds related to trading differences, tax efficiency potential and often times, lower expense ratios.

This is where an investor, with the help of a skilled advisor, can glean an additional benefit of investing with FlexShares: the support and educational resources available to them. The FlexShares investor - with the help of our education-centered approach - seeks to provide both prospective and current clients with the tools required to accurately assess all of the benefits of our ETFs - no matter their current size - to help meet the individual investors' objectives.

Here are four fundamental features of the FlexShares ETF construction process that we believe should help investors who believe that “bigger is better." FlexShares ETFs are:

Built by investors, for investors.

FlexShares maximizes investment mastery and research across disciplines—equity, fixed income, passive, active—to build its unique funds. We believe our alternativeweighted, index-based ETF construction means the strength of underlying indices and factors used to measure their performance matter most, not size.

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Constructed using a formal multi-asset approach.

FlexShares develops portfolios using an effective combination of asset classes chosen based on precise methodologies that consider exposures, risk factors, diversification, and costs. Leveraging diversified strategies within asset classes and/or market segments, the portfolios are comprised of asset classes with the most stable histories and strongest likelihood of above-average returns.

We believe this allows FlexShares ETFs to maintain long-term agility and respond to dynamic markets while continuing to meet the ETFs underlying investment objectives.

Built around the way investors think.

Under its investor-centric philosophy, FlexShares partners with index providers to develop transparent, simple, and goals-driven investment solutions. Most ETFs only track a benchmark, but FlexShares' ETFs are crafted around the factors investors care about, objectives like asset growth, risk management, income generation, and managing liquidity. This means that "passively-managed" doesn't necessarily mean “managed alone" with FlexShares. We are committed to helping advisors and their investors achieve desired but real-world outcomes. Investors have ongoing access to Contently 2 consistently-developed high-value tools and resources that educate them on creating, allocating, and managing their portfolios effectively.

Focused on long-term investors.

Understanding that achieving investment outcomes is a long-game strategy that requires time and patience, FlexShares ETFs deliberately focus on long-term investor needs. Whether that's growing assets, managing risk, generating income, or providing liquidity, FlexShares ETFs are designed to help investors achieve their unique investment goals within timelines that most matter to them.

Tags: ETF

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