FlexShares To Launch Global REIT ETF

November 05, 2013

The income-generating fund is smack in the middle of a number of ETF industry trends.

FlexShares, the ETF arm of Chicago-based bank Northern Trust, on Wednesday is launching a globally focused REIT ETF that will trade under the symbol “GQRE.” The fund is a fundamental self-indexed offering that is looking to capitalize on popular trends currently playing out within the ETF space.

The FlexShares Global Quality Real Estate Index Fund is benchmarked to the Northern Trust Global Quality Real Estate Index, which is betting on U.S. and non-U.S. real estate investment trusts and real estate companies with proven profitability, management expertise and cash flow, among other factors, according to the fund’s latest filing.

Crucial to investors is the fact that dividend ETFs remain popular in the current uncertain market. As long as REITs are required by the IRS to pay out at least 90 percent of their annual incomes to shareholders, FlexShares is betting that its latest offering will find a place in yield-hungry investors’ portfolios.

The fundamental fund’s launch comes at a time when the S&P 500 is hitting new highs and large-cap stocks look stable in an environment of economic uncertainty. WisdomTree is one of the pioneers of both fundamental and self-indexing. The majority of its lineup comprises fundamentally weighted ETFs that target securities based on their earnings and dividend streams.

The FlexShares’ fund’s self-indexing methodology also follows suit with other firms, such as Emerging Global Advisors and Salient Advisors, that are looking to bring their wares to market more efficiently and cheaper relative to their peers who utilize third-party indexers.

FlexShares’ GQRE will trade on the NYSE Arca and will bump heads against the $1.1 billion SPDR Dow Jones Global Real Estate ETF (RWO | C-65); and the $112.4 million Cohen & Steers Global Realty Majors fund (GRI | C-67), which have expense ratios of 50 and 55 basis points, respectively.

The fund is looking to undercut its more established peers by charging 0.45 percent, or $45 for every $10,000 invested.

 

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