FlexShares iBoxx 3-Year Target Duration TIPS Index Fund (TDTT)

Overview

The FlexShares iBoxx 3-Year Target Duration TIPS Index Fund (TDTT) seeks to track the investment results of an index composed of inflation-protected public obligations of the U.S. Treasury, with a targeted average duration of three years. The fund primarily invests in Treasury Inflation-Protected Securities (TIPS).

Reputation and Reliability

Northern Trust is a well-established and reputable asset manager with a long history in the financial industry.

Management Expertise

Northern Trust Asset Management has considerable experience in managing fixed-income ETFs, including those focused on inflation-protected securities.

Goal

To track the performance, before fees and expenses, of the iBoxxu00ae 3-Year Target Duration TIPS Index.

Investment Approach and Strategy

Strategy: The fund employs a passive management strategy, attempting to replicate the composition and characteristics of the underlying index.

Composition The fund primarily holds Treasury Inflation-Protected Securities (TIPS) issued by the U.S. government.

Market Share: TDTT has a moderate market share within the target duration TIPS ETF category.

Total Net Assets (AUM): 141000000

Key Competitors

• SCHP
• VTIP
• STIP

Competitive Landscape

The competitive landscape is dominated by larger, more liquid ETFs like SCHP and VTIP. TDTT offers a specific 3-year target duration, which may appeal to investors seeking a more precise duration exposure compared to broader TIPS ETFs. However, it faces challenges in terms of liquidity and AUM compared to its larger competitors.

Historical Performance: Historical performance can be found on financial websites, it varies based on the timeframe, reflecting changes in interest rates and inflation expectations.

Benchmark Comparison: The ETF's performance should closely track the iBoxx 3-Year Target Duration TIPS Index. Tracking error should be minimal due to its passive management style.

Expense Ratio: 0.19

Average Trading Volume

The average daily trading volume of TDTT is moderate, and further investigation into its historical daily volume data is recommended to evaluate liquidity.

Bid-Ask Spread

The bid-ask spread can fluctuate, investors are advised to check the current spread before trading, as higher spreads result in higher transaction costs.

Market Environment Factors

Economic indicators such as inflation rates, interest rate policies of the Federal Reserve, and overall economic growth significantly impact TDTT. Changes in inflation expectations directly affect the value of TIPS.

Growth Trajectory

The growth trajectory is tied to investor demand for inflation protection. A rising interest rate environment and increased inflation expectations could drive more investment into TDTT.

Competitive Edge

TDTT's competitive advantage lies in its precise 3-year target duration, offering investors a focused exposure to the intermediate part of the TIPS yield curve. This targeted duration can be beneficial for investors seeking to match the duration of their liabilities or to implement specific duration strategies. The fund is a relatively small player compared to competitors VTIP and SCHP. This target duration helps mitigate interest rate risk, as it reduces the impact of long-term rate fluctuations.

Volatility

TDTT's volatility is generally lower compared to equities due to its focus on government bonds. The fund's volatility depends on interest rate changes and inflation expectations.

Market Risk

The main market risks include interest rate risk (changes in interest rates) and inflation risk (unexpected decreases in inflation). While TIPS are designed to protect against inflation, deflation can negatively impact their value.

Ideal Investor Profile

The ideal investor is one seeking to hedge against inflation, manage interest rate risk with a specific duration target, or diversify a fixed-income portfolio with inflation-protected securities.

Market Risk

TDTT is suitable for long-term investors looking to preserve capital and protect against inflation, as well as those implementing specific duration strategies within a portfolio.

The FlexShares iBoxx 3-Year Target Duration TIPS Index Fund (TDTT) offers a targeted exposure to inflation-protected securities with a specific 3-year duration. It is passively managed and seeks to replicate the performance of the iBoxx 3-Year Target Duration TIPS Index. TDTT is a suitable option for investors concerned about inflation and seeking a fixed-income asset class to hedge against rising prices. However, its smaller size and trading volume should be considered when making investment decisions. The fund's performance is directly linked to inflation expectations and interest rate movements.

Data Sources:

• Morningstar
• FactSet
• ETF.com
• FlexShares Website

Disclaimers:

The information provided is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions. Market share data can fluctuate and is based on the most recent available information.