The latest U.S.-focused payout funds are FlexShares' first go at self-indexing ETFs.
FlexShares, Northern Trust’s ETF unit, today is rolling out three dividend ETFs, the first in a broader lineup the company is bringing to market linked to in-house indexes designed by Northern Trust itself.
The ETFs invest in high-quality income-generating U.S. securities with the goal of not only generating income but providing investors with long-term capital growth. They are part of a planned six-fund dividend-focused lineup FlexShares currently has in registration.
The ETFs, as well as their tickers and expense ratios, are as follows:
- FlexShares Quality Dividend Index Fund (NYSEArca: QDF), 0.37 percent after a 0.01 percent fee reimbursement.
- FlexShares Quality Dividend Defensive Index Fund (NYSEArca: QDEF), 0.37 percent
- FlexShares Quality Dividend Dynamic Index Fund (NYSEArca: QDYN), 0.37 percent
The launches put FlexShares in the middle of a quickly crowding ETF segment—more than 30 ETFs today focus on dividend stocks—as investors continue to look for income such as healthy dividends at a time when ultra-low bond yields are the norm in fixed income.
The portfolios will each comprise high-quality U.S. securities. Companies included in the various underlying indexes will be selected based on expected dividend payments as well as fundamental factors such as profitability, solid management and reliable cash flow, the company said in the prospectus.
Each fund will target volatility, with the “Quality Dividend” name indicating that volatility of the funds’ holdings will be in line with the index. “Dynamic” and “Defensive” suggest that volatility will be above and below each respective index, the filing said.
FlexShares also has three other similar strategies, but international in scope, which include the FlexShares International Quality Dividend Index Fund (NYSEArca: IQDF), FlexShares International Quality Dividend Dynamic Index Fund (NYSEArca: IQDY) and the FlexShares International Quality Dividend Defensive Index Fund (NYSEArca: IQDE).
Each of the international strategies will cost 0.47 percent after reimbursement of 0.01 percent. It’s unclear when they will launch.