FlexShares Plans Global Infrastructure ETF

July 08, 2013

Northern Trust’s ETF unit now has a global infrastructure fund in registration, the latest in a crowding field.

Northern Trust, the Chicago-based bank whose lineup of 13 “FlexShares” ETFs have gathered $5.37 billion since the first ones came to market less than two years ago, filed regulatory paperwork to bring to market a global infrastructure fund, which would make it the fourth entrant in an increasingly popular space.

The FlexShares Global Infrastructure Index Fund will focus on domestic as well as international stocks in the infrastructure space, owning emerging and developed-market securities to create a diversified portfolio of assets upon which the operation, growth and development of a community depends.

“Infrastructure assets are defined by the index provider as the physical structures and networks upon which the operation, growth and development of a community depends, and include water, sewer, and energy utilities; transportation, data and communication networks or facilities; health care facilities, government accommodations, and other public-service facilities; and shipping,” the prospectus said.

The biggest of the competing funds is the iShares Global Infrastructure fund (NYSEArca: IGF) which has $448.5 million in assets under management, followed by the SPDR S&P Global Infrastructure Fund (NYSEArca: GII), which has $68.2 million in assets. Both are organized around the same benchmark, the S&P Global Infrastructure Index.


The proposed Northern Trust infrastructure also recalls the FlexShares Morningstar Global Upstream Natural Resources fund (NYSEArca: GUNR) in that the new fund also casts a wide net in both the developing and developed world, including the United States.

The new fund is also likely to have some duplicative holdings in the energy sector, which comprise more than a third of GUNR’s holdings.

The parallels are worth pointing out to the extent that GUNR is the most successful FlexShares ETF, with an impressive $2.4 billion in assets after less than two years of trading.

The proposed fund will be listed on the New York Stock Exchange’s electronic trading platform, but  doesn’t yet have a ticker or price.

iShares’ IGF has an annual expense ratio of 0.48 percent, or $48 for each $10,000 invested, while SSgA’s GII costs 0.40 percent a year.


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