FlexShares Launches Disciplined Duration MBS Index ETF
September 04 2014 - 7:30AM
Business Wire
New ETF to provide dependable MBS income
generation alternative at reduced volatility
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:
- An accessible and efficient investment
product which provides fixed income MBS sector exposure
- Residential agency fixed-rate MBS
exposure (excludes adjustable-rate or hybrid mortgages)
- Constrained effective duration, which
may help generate incremental returns with lower volatility
- 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).
FlexSharesMedia Contacts:Doug
Holt312-557-1571Doug_Holt@ntrs.comorMichael
VanDam312-375-0872Michael.VanDam@Edelman.comhttp://www.flexshares.com
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