FlexShares Developed Markets ex-US Quality Low Volatility Index Fund (QLVD)

Overview

The FlexShares Developed Markets ex-US Quality Low Volatility Index Fund (QLDV) seeks to invest in companies that exhibit characteristics of quality and low volatility in developed markets outside of the United States. The fund aims to provide exposure to international equities while mitigating downside risk.

Reputation and Reliability

FlexShares is a brand of ETFs offered by Northern Trust Asset Management, a global financial institution with a long-standing reputation for trust and reliability in asset management.

Management Expertise

Northern Trust Asset Management has a team of experienced investment professionals dedicated to creating and managing innovative ETF strategies. Their expertise lies in quantitative research and portfolio construction.

Goal

To provide investment results that correspond generally to the performance of the Northern Trust Developed Markets ex-US Quality Low Volatility Index.

Investment Approach and Strategy

Strategy: The ETF tracks a proprietary index designed to identify and invest in a diversified portfolio of equity securities from developed markets, excluding the U.S., that have demonstrated characteristics of quality and low volatility.

Composition The ETF primarily holds a diversified portfolio of equities (stocks) from developed countries outside of the U.S. The selection process focuses on companies with strong financial health and stable stock prices.

Market Share: Data on specific market share for this niche ETF is not readily available in public datasets. However, FlexShares as a brand holds a notable position in the ETF market.

Total Net Assets (AUM): As of recent data (example: 31-Aug-2023), the Total Net Assets (AUM) for QLDV were approximately $794 million USD.

Key Competitors

• iShares MSCI EAFE Minimum Volatility ETF (EFAV)
• Vanguard FTSE Developed Markets ETF (VEA)
• iShares Core MSCI EAFE ETF (IEFA)

Competitive Landscape

The developed markets ex-US ETF space is highly competitive, with several large players offering broad market exposure or factor-based strategies. QLDV's advantage lies in its specific focus on 'quality' and 'low volatility' factors, potentially appealing to risk-averse investors seeking international diversification. However, its market share is smaller compared to broader index ETFs, suggesting a more niche appeal. Competitors like EFAV also focus on low volatility, while VEA and IEFA offer broader market exposure at potentially lower expense ratios.

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Benchmark Comparison: QLDV generally aims to track its underlying index. Performance relative to its benchmark is typically very close, with minor tracking differences due to fees and operational costs.

Expense Ratio: 0.33%

Average Trading Volume

The average daily trading volume for QLDV is generally sufficient for most retail and institutional investors to enter and exit positions without significant price impact.

Bid-Ask Spread

The bid-ask spread for QLDV is typically tight, reflecting good liquidity and low trading costs for investors.

Market Environment Factors

Economic conditions in developed ex-US markets, currency fluctuations, geopolitical events, and investor sentiment towards quality and low-volatility strategies significantly influence QLDV's performance. Growth prospects for specific sectors within developed economies also play a role.

Growth Trajectory

QLDV's growth trajectory is influenced by investor demand for defensive international equity exposure. Changes in its strategy or holdings are dictated by the underlying index methodology, which aims to maintain its quality and low-volatility characteristics.

Competitive Edge

QLDV's competitive edge stems from its proprietary index methodology that specifically targets both 'quality' and 'low volatility' factors in developed ex-US markets. This dual focus offers a distinct approach compared to ETFs that might prioritize only one of these factors. The backing of Northern Trust provides a layer of institutional credibility and operational stability. This targeted approach can appeal to investors seeking to reduce portfolio risk while maintaining international diversification.

Volatility

QLDV is designed to be lower in volatility than broad-based developed market ex-US equity indices. Historical volatility has generally been observed to be below that of its broader market counterparts, reflecting its low-volatility selection criteria.

Market Risk

The fund is subject to market risk associated with investing in developed international equities. This includes risks related to economic downturns, political instability, currency fluctuations, and changes in interest rates in the countries where its underlying holdings are located.

Ideal Investor Profile

This ETF is suitable for investors seeking to diversify their portfolios internationally with a focus on stability and capital preservation. It is ideal for those who want exposure to developed markets outside the U.S. but are concerned about market downturns and seek companies with strong fundamentals.

Market Risk

QLDV is best suited for long-term investors who are looking for a core holding in their international equity allocation, especially during periods of market uncertainty. It can also be considered by passive index followers who are specifically interested in the quality and low volatility factors.

The FlexShares Developed Markets ex-US Quality Low Volatility Index Fund (QLDV) offers a targeted approach to international equity investing by focusing on high-quality companies with low stock price volatility. Its strategy aims to provide diversification while mitigating downside risk in developed markets outside the United States. While facing competition, its unique factor-based methodology and the backing of Northern Trust provide a distinct advantage for risk-conscious investors seeking international exposure. QLDV is a suitable option for long-term investors looking for a more defensive international equity component.

Data Sources:

• FlexShares website
• Financial data providers (e.g., Morningstar, ETF.com)
• Northern Trust Asset Management reports

Disclaimers:

This information is for illustrative purposes only and should not be considered investment advice. ETF performance can vary, and past performance is not indicative of future results. Investors should consult with a financial advisor before making any investment decisions.