FlexShares Launches Credit‐Scored US Corporate Bond Index ETF
13 November 2014 - 3:00PM
Business Wire
New ETF to provide intermediate bond exposure
with improved liquidity, transparency and credit evaluation
FlexShares® Exchange Traded Funds, sponsored and managed by
Northern Trust, today introduced FlexShares Credit‐Scored US
Corporate Bond Index Fund (Nasdaq: SKOR), a fixed income portfolio
consisting of corporate debt securities selected using a
proprietary credit evaluation process. The Fund focuses on an
intermediate maturity, with securities ranging from 2 to 10 years
in maturity.
The FlexShares® Credit‐Scored US Corporate Bond Index Fund
features:
- An accessible and efficient investment
product which provides exposure to U.S. corporate debt
- An exclusion of illiquid and smaller
issuers for improved liquidity and transparency
- A proprietary credit score used to
evaluate and rank the universe of issuers
- Optimization to maximize exposure to
the credit score while maintaining a similar spread and duration to
the universe
- An index-based strategy with
competitive fees.
“Regulatory changes impacting the fixed income capital markets
and persistent low interest rates have caused institutional
investors and financial advisors to reassess their investment
options for exposure to corporate bonds,” said Shundrawn A. Thomas,
head of Northern Trust’s Funds and Managed Accounts Group. “The
FlexShares® Credit‐Scored US Corporate Bond Index Fund employs a
rules-based methodology that incorporates forward-looking financial
metrics to optimize credit risk while providing improved
transparency and liquidity as compared to legacy corporate bond
benchmarks.”
The underlying index is the Northern Trust Credit-Scored US
Corporate Bond Index. It is designed to measure the performance of
a diversified universe of intermediate maturity, U.S.-dollar
denominated bonds of companies with investment grade-like
characteristics, and enhanced short-term and long-term solvency. To
promote liquidity, securities must have an effective maturity of
2-10 years and at least $500mm in amount outstanding to be eligible
for inclusion. The index’s construction utilizes an optimization
process which has primary objectives of maximizing exposure to our
proprietary credit-score, while also maintaining an option adjusted
spread and effective duration similar to the eligible universe. The
proprietary credit-score seeks to identify companies that exhibit
strength in management efficiency, profitability, and solvency.
For more information, please visit www.flexshares.com.
Before investing, carefully consider the FlexShares investment
objectives, risks, charges and expenses. This and other information
is in the prospectus, a copy of which may be obtained by visiting
www.flexshares.com. Read the prospectus carefully before you
invest.
Foreside Fund Services, LLC, distributor.
About FlexShares
FlexShares Exchange Traded Funds are designed to pursue specific
investment goals across both passive and active strategies.
FlexShares offers differentiated ETF strategies that improve and
simplify the investment decision process for the long-term
investor. For more information, please visit
www.flexshares.com.
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider
of investment management, asset servicing, fund administration,
fiduciary and banking solutions for corporations, institutions,
families and individuals worldwide. Chicago-based Northern Trust
has offices in 19 states, Washington, D.C., and 19 international
locations in Canada, Europe, the Middle East and the Asia-Pacific
region. As of September 30, 2014, Northern Trust had assets under
custody of US$6 trillion, and assets under investment management of
US$923 billion. For 125 years, Northern Trust has earned
distinction as an industry leader in combining exceptional service
and expertise with innovative products and technology. For more
information, visit www.northerntrust.com and follow us on Twitter
@NorthernTrust.
An investment in FlexShares is subject to numerous risks,
including possible loss of principal. Fund returns may not
match the return of the respective indexes. The Funds are
subject to the following principal risks: asset class; commodity;
concentration; counterparty; currency; derivatives; dividend;
emerging markets; equity securities; fluctuation of yield; foreign
securities; geographic; income; industry concentration;
inflation-protected securities; infrastructure-related companies;
interest rate / maturity risk; issuer; management; market; market
trading; mid cap stock; MLP; natural resources; new funds;
non-diversification; passive investment; privatization; small cap
stock; tracking error; value investing; and volatility risk.
A full description of risks is in the prospectus.
In addition, FlexShares Credit-Scored US Corporate Bond Index
Fund is subject corporate bond risk, which is the risk that the
issuer is unable to meet principal and interest rate payments on
the obligation and may also be subject to price volatility due to
such factors as interest rate sensitivity, market perception of
credit worthiness of and general market liquidity. When interest
rates rise, the value of corporate debt can be expected to decline.
The Fund may invest in derivative instruments. Changes in the value
of the derivative may not correlate with the underlying asset, rate
or index and the Fund could lose more than the principal amount
invested. The Fund is also non-diversified meaning the Fund
performance may depend on the performance of a small number of
issuers because the Fund may invest a large percentage of assets in
securities issued by or representing a small number of issuers.
Duration is the sensitivity of a fixed income security’s price
to a change in interest rates.
Spread is the difference in the yield on a corporate bond and a
government bond with a similar maturity.
For FlexShares Exchange Traded FundsMedia Contacts:Doug
Holt312-557-1571Doug_Holt@ntrs.comMichael
VanDam312-375-0872Michael.VanDam@Edelman.comhttp://www.flexshares.com
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