FlexShares Exchange Traded Funds, sponsored and managed by Northern Trust, has launched the FlexShares Global Quality Real Estate Index Fund (GQRE).
The fund attempts to outperform traditional real estate indices via global exposure to listed, non-mortgage real estate investment trusts and operating companies that emphasise stable, long-term capital growth at an attractive price.
The fund employs Northern Trust's Quality Score, a proprietary quantitative methodology that uses fundamental data to evaluate the strength of a company's financial health and growth prospects. The Quality Score index, similar to the methodology used in FlexShares' Quality Dividend product suite, incorporates factors of management efficiency, profitability and cash flow.
The fund strives to outperform legacy real estate indices in upward and downward trending markets during central bank tightening and easing cycles. It uses a combination of current and historical valuation metrics that include a momentum factor to try to avoid “value traps”.
"Research shows that a high-quality, value-focused portfolio of real estate securities may offer attractive returns with less volatility compared to traditional capitalisation-weighted global real estate indices," says Shundrawn Thomas, head of Northern Trust's FlexShares Exchange Traded Funds group. "GQRE provides investors a disciplined approach for investing in global real estate equities."