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FlexShares Debuts 3 Dividend ETFs
Eric Dutram

Northern Trust’s second attempt at the ETF game is turning out to be a whole lot better than the first. The firm, under its FlexShares brand name, has seen a huge level of interest in many of its products, allowing the company to accumulate nearly $4.7 billion in total assets.

This is despite having one of the smaller lineups of ETFs, suggesting that a few of the funds have been big winners. This has especially been the case for its commodity focused ETF GUNR, and a short-term TIPS ETF, TDTT, both of which have more than one billion in total assets.

Thanks in part to this success, FlexShares has been more active on the product development front, putting out a few new ETFs over the past year. This trend looks to continue in Q2 as the firm has just launched three new international products that focus in on dividends (see 3 Red Hot Dividend ETFs).

This continues the broad trend in the market towards higher income securities, a situation that has become important thanks to the Fed’s low rate policies. With this backdrop, many investors have begun to look to stocks for income, and international ETFs have taken a good chunk of this attention.

The space is now a bit more crowded thanks to FlexShares’ new ETFs. This is especially true given the use of Northern Trust’s Dividend Quality Score (:DQS) in all three of the new products.

This proprietary quantitative method uses fundamental data to assess the strength and quality of a firm’s dividend-paying record and its prospects going forward. The process is based on three main factors; management efficiency and dividend policy, profitability, and cash flow to sustain dividend payments (read 4 Excellent Dividend ETFs for Income and Stability).

A focus on yield while utilizing this process could be of interest to investors seeking companies that have a great chance to keep paying out strong yields over long time periods. Given this, the new FlexShares funds could be of interest to those seeking plays beyond the U.S. market, and we have highlighted some of the other key points about the trio below:

International Quality Dividend Defensive Index Fund (IQDE)

This ETF looks to track the Northern Trust International Quality Dividend Dynamic Index, charging investors 47 basis points a year in fees. The benchmark seeks to provide exposure to long-term growth stocks in the broad international environment with a focus on yield, using the DQS system.

Additionally, the benchmark will focus on lower beta stocks in order to be more defensive in turbulent times. The target calls for a beta between 0.5 and 1.0 times the Northern Trust International Large Cap Index, so there could be a wide range for this fund’s riskiness level.

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