FlexShares®
Exchange Traded Funds, sponsored and managed by Northern Trust, today
introduced the FlexShares Disciplined Duration MBS Index Fund (NASDAQ:
MBSD), a fixed income portfolio consisting of investment-grade U.S.
agency mortgage-backed pass-through securities (“MBS”) issued by U.S.
government agencies: the Federal National Mortgage Association (FNMA or
Fannie Mae), the Federal Home Loan Mortgage Corporation (FHLMC or
Freddie Mac) or the Government National Mortgage Association (GNMA or
Ginnie Mae). The Fund targets an average effective duration of 3.75
years, with an admissible range between 3.25 and 4.25 years.
The FlexShares®
Disciplined Duration MBS Index Fund features:
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An accessible and efficient investment product which provides fixed
income MBS sector exposure
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Residential agency fixed-rate MBS exposure (excludes adjustable-rate
or hybrid mortgages)
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Constrained effective duration, which may help generate incremental
returns with lower volatility
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An index-based strategy with competitive fees
“With our ongoing focus on real-world investor needs, we developed this
Fund as an income generation tool that offers investors the unique
characteristics of the mortgage-backed securities (MBS) sector,” said
Shundrawn A. Thomas, Executive Vice President and Head of Northern
Trusts’ Funds and Managed Accounts Group. “The FlexShares®
Disciplined Duration MBS Index Fund is designed to help investors
generate income and diversify their fixed income exposure while
dampening the volatility that can result from duration risk.”
The Underlying Index is The BofA Merrill Lynch Constrained Duration US
Mortgage Backed Securities Index (“M375”), an alternatively-weighted
index composed of 15-year, 20-year and 30-year fixed rate residential
agency mortgage pools sponsored by Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the “Index Provider”). The Index Provider determines the
composition and relative weightings of the securities in the Underlying
Index in accordance with a published methodology and is reconstituted on
a monthly basis.
For more information, please visit www.flexshares.com.
Before investing, carefully consider the FlexShares investment
objectives, risks, charges and expenses. This and other information is
in the prospectus, a copy of which may be obtained by visiting www.flexshares.com.
Read the prospectus carefully before you invest.
Foreside Fund Services, LLC, distributor.
About FlexShares
FlexShares Exchange Traded Funds are designed to pursue specific
investment goals across both passive and active strategies. FlexShares
offers differentiated ETF strategies that improve and simplify the
investment decision process for the long-term investor. For more
information, please visit www.flexshares.com.
About Northern Trust
Northern Trust Corporation (NASDAQ: NTRS) is a leading provider of
investment management, asset servicing, fund administration, fiduciary
and banking solutions for corporations, institutions, families and
individuals worldwide. Chicago-based Northern Trust has offices in 19
states, Washington, D.C., and 19 international locations in Canada,
Europe, the Middle East and the Asia-Pacific region. As of June 30,
2014, Northern Trust had assets under custody of US$6 trillion, and
assets under investment management of US$924.4 billion. For 125 years,
Northern Trust has earned distinction as an industry leader in combining
exceptional service and expertise with innovative products and
technology. For more information, visit www.northerntrust.com
and follow us on Twitter @NorthernTrust.
An investment in FlexShares is subject to numerous risks, including
possible loss of principal. Fund returns may not match the return of the
respective indexes. The Funds are subject to the following principal
risks: asset class; commodity; concentration; counterparty; currency;
derivatives; dividend; emerging markets; equity securities; fluctuation
of yield; foreign securities; geographic; income; industry
concentration; inflation-protected securities; infrastructure-related
companies; interest rate / maturity risk; issuer; management; market;
market trading; mid cap stock; MLP; natural resources; new funds;
non-diversification; passive investment; privatization; small cap stock;
tracking error; value investing; and volatility risk. A full description
of risks is in the prospectus.
In addition, FlexShares Disciplined Duration MBS Index Fund
(NASDAQ:MBSD) is subject to credit risk, which is the risk that the
inability or unwillingness of an issuer or guarantor of a fixed-income
security, or a counterparty to a TBA, repurchase or other transaction,
to meet its payment or other financial obligations will adversely affect
the value of the Fund’s investments and its returns. Changes in the
credit rating of a debt security held by the Fund could have a similar
effect. Debt extension risk is the risk that an issuer will exercise its
right to pay principal on an obligation held by the Fund (such as a
mortgage-backed security) later than expected. This may happen during a
period of rising interest rates. Under these circumstances, the value of
the obligation will decrease and the Fund will suffer from the inability
to invest in higher yielding securities. Mortgage-backed pass-through
securities risk is the risk of investing in mortgage-backed securities
issued by a U.S. Agency. These securities may not be backed by the full
faith and credit of the U.S. government. As interest rates rise, bond
prices fall, reducing the value of fixed income investments.
About the Index Provider
Merrill Lynch, Pierce, Fenner & Smith Incorporated and/or its affiliates
compile and publish the Underlying Index. Merrill Lynch, Pierce, Fenner
& Smith Incorporated and its affiliates (“BofA Merrill Lynch”) indices
and related information, the name “BofA Merrill Lynch”, and related
trademarks, are intellectual property licensed from BofA Merrill Lynch,
and may not be copied, used, or distributed without BofA Merrill Lynch’s
prior written approval. The licensee’s products have not been passed on
as to their legality or suitability, and are not regulated, issued,
endorsed, sold, guaranteed, or promoted by BofA Merrill Lynch. BOFA
MERRILL LYNCH MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO
THE INDICES, ANY RELATED INFORMATION, ITS TRADEMARKS, OR THE PRODUCT(S)
(INCLUDING WITHOUT LIMITATION, THEIR QUALITY, ACCURACY, SUITABILITY
AND/OR COMPLETENESS).
Copyright Business Wire 2014