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

Overview

The FlexShares Developed Markets ex-US Quality Low Volatility Index Fund (EFAV) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Developed Markets ex-U.S. Quality Low Volatility IndexSM. It focuses on developed markets outside the US, selecting companies based on quality and low volatility characteristics.

Reputation and Reliability

FlexShares is a known ETF issuer with a track record of providing innovative and factor-based investment solutions. They are generally considered reliable.

Management Expertise

FlexShares ETFs are managed by Northern Trust Asset Management, a large and experienced asset manager.

Goal

To provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Developed Markets ex-U.S. Quality Low Volatility IndexSM.

Investment Approach and Strategy

Strategy: The fund tracks the Northern Trust Developed Markets ex-U.S. Quality Low Volatility IndexSM. This index selects companies based on quality (profitability, management efficiency, and cash flow) and low volatility.

Composition The ETF primarily holds stocks of companies in developed markets excluding the United States. It invests in a diversified portfolio of these companies, weighted to emphasize quality and low volatility.

Market Share: EFAV has a moderate market share within the developed ex-US low volatility ETF category.

Total Net Assets (AUM): 317000000

Key Competitors

• iShares MSCI EAFE Min Vol Factor ETF (EFAV)
• Invesco S&P International Developed Quality ETF (IDHQ)
• SPDR MSCI EAFE Low Volatility ETF (EELV)

Competitive Landscape

The developed ex-US low volatility ETF market is moderately competitive. EFAV's advantage lies in its specific index construction methodology focusing on both quality and low volatility factors. Disadvantages include the potential for underperformance compared to broad market ETFs during strong bull markets and higher expense ratio than some competitors.

Historical Performance: Historical performance data can be obtained from various financial data providers and should be reviewed to understand the ETF's performance over different market cycles.

Benchmark Comparison: The ETF's performance should be compared to its benchmark index, the Northern Trust Developed Markets ex-U.S. Quality Low Volatility IndexSM, to assess its tracking effectiveness.

Expense Ratio: 0.22

Average Trading Volume

The ETF's average trading volume is moderate, suggesting adequate liquidity for most investors.

Bid-Ask Spread

The bid-ask spread is generally tight, indicating relatively low trading costs.

Market Environment Factors

Economic conditions in developed markets outside the US, interest rates, currency fluctuations, and geopolitical events can significantly impact the fund's performance.

Growth Trajectory

The growth trajectory of the ETF is dependent on the overall performance of developed markets excluding the US, as well as the effectiveness of its quality and low volatility screening process. Changes to strategy and holdings are disclosed in fund prospectuses and reports.

Competitive Edge

EFAVu2019s competitive advantage is the focus on quality in conjunction with low volatility, which is a different approach than pure low volatility ETFs. The fund selects companies that exhibit strong financials with profitability and cash flow that are less volatile than their peers. This can provide investors with better downside protection during turbulent times. EFAV screens holdings and rebalances regularly to maintain a portfolio exhibiting these factors.

Volatility

EFAVu2019s historical volatility is expected to be lower than the broader developed ex-US market due to its low volatility mandate.

Market Risk

The ETF is subject to market risk associated with investments in developed markets outside the US. These risks include economic downturns, political instability, and currency fluctuations.

Ideal Investor Profile

The ideal investor is risk-averse and seeks lower volatility exposure to developed markets outside the US. They are looking for a balance of quality and downside protection.

Market Risk

The ETF is suitable for long-term investors who want a less volatile international equity allocation or those seeking downside protection in their portfolio.

The FlexShares Developed Markets ex-US Quality Low Volatility Index Fund (EFAV) offers exposure to developed markets excluding the US with a focus on quality and low volatility. The ETF is a good fit for risk-averse investors looking for a less volatile international equity allocation. The fund has a moderate expense ratio but can provide investors downside protection. While it may underperform in a strong bull market, it can offer a smoother investment experience over a full market cycle.

Data Sources:

• FlexShares website
• Northern Trust Asset Management
• ETF.com
• Morningstar

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered financial advice. Investment decisions should be made based on individual circumstances and consultation with a qualified financial advisor. Market share and performance data are subject to change.