Northern Trust launches FlexShares ETFs based on natural resources, TIPS indexes

By Susanna Moon

Chicago, Sept. 26 - Northern Trust said it launched a new family of exchange-traded funds called FlexShares based on indexes created and maintained by Morningstar, Inc. and Markit.

The four funds now trading on the New York Stock Exchange are the FlexShares Morningstar Global Upstream Natural Resources index fund (GUNR), the FlexShares Morningstar U.S. Market Factor Tilt index fund (TILT), the FlexShares iBoxx 3-Year Target Duration TIPS index fund (TDTT) and the FlexShares iBoxx 5-Year Target Duration TIPS index fund (TDTF).

The iBoxx funds seek to provide investors access to Treasury Inflation Protected Securities with stable duration exposure through changing interest rate and economic cycles, according to a Northern Trust press release. iBoxx is a family of independent bond indexes provided by Markit.

"The FlexShares TIPS ETFs precisely target TIPS durations, seeking to provide investors with more efficient inflation-hedging strategies than market-weighted investment products," Shundrawn Thomas, head of Northern Trust's ETF group, said in the release.

"Using indexes developed by Markit, these are the first ETFs to offer investors a passively managed, liquid investment vehicle that effectively removes duration variability in a TIPS portfolio."

The Global Upstream Natural Resources index fund seeks to offer balanced exposure to rising global demand for natural resources, emphasizing companies with business interests in the early stages of the resource supply chain, the release said.

The U.S. Market Factor Tilt fund seeks to offer an alternative exposure to the broad U.S. stock market by tilting the portfolio to capture the size and value premiums in the equity market, the company noted.

"Morningstar's index captures 99.5% of the U.S. market," Thomas said. "With a rules-based tilt toward small cap and value, the FlexShares Morningstar U.S. Market Factor Tilt Index ETF counterbalances the inherent bias toward large-growth companies embedded in market-weighted mutual funds."

Northern Trust is a financial services firm based in Chicago.

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