Northern Trust Shuts 2 Emerging-Market Factor ETFs

The funds failed to meet their minimum requirements for assets under management.

Northern Trust Asset Management is closing two emerging-market factor ETFs because of low assets under management.

The FlexShares Emerging Market High Dividend Climate ESG UCITS ETF (QDFE) and the FlexShares Emerging Market Low Volatility Climate ESG UCITS ETF (QVFE) will delist from Euronext and Deutsche Boerse on Oct. 17.

The move comes two years after Northern Trust launched QDFE and QVFE, which have amassed $4.3 million and $5.3 million, respectively.

The firm decided to close the ETFs after they failed to meet their stated minimum fund size of $20 million.

"At FlexShares, we are committed to delivering investment solutions to meet the needs of investors,” a spokesperson from Northern Trust Asset Management said.

"From time to time, we may opt to open or close funds if conditions warrant. After review, the board has determined it would be in the best interests of the funds and its shareholders to close and liquidate the funds.”

Negative Returns Since Inception

Both ETFs, which targeted companies with strong profitability, management expertise and cash flow, have recorded negative returns since inception.

QDFE has returned -9.3% since inception to the end of August while QVFE returned -7% versus -22.6% for the MSCI Emerging Market index.

The closures cut NTAM’s ETF range down to three with a combined $218 million in assets under management, the largest of which is the FlexShares Listed Private Equity UCITS ETF (FLPE) with $200 million in assets under management

The remaining two, the FlexShares Developed Markets High Dividend Climate ESG UCITS ETF (QDFD) and the FlexShares Developed Markets Low Volatility Climate ESG UCITS ETF (QVFD), have $13 million and $5.3 million in assets under management, respectively.

Northern Trust entered the market with the two developed markets ETFs in February 2021, before launching their emerging-market counterparts seven months later.