Industry Updates

Northern Trust shuts two emerging market factor ETFs

High dividend and low volatility ETFs to close

Theo Andrew


Northern Trust Asset Management (NTAM) is closing two emerging market factor ETFs due to low assets under management (AUM).

The FlexShares Emerging Market High Dividend Climate ESG UCITS ETF (QDFE) and the FlexShares Emerging Market Low Volatility Climate ESG UCITS ETF (QVFE) will delist from Euronext and Deutsche Boerse on 17 October.

It comes two years after NTAM launched QDFE and QVFE, which have amassed $4.3m and $5.3m, respectively.

The firm decided to close the ETFs after failing to meet their stated minimum fund size of $20m.

A NTAM spokesperson said: "At FlexShares, we are committed to delivering investment solutions to meet the needs of investors.

"From time to time, we may opt to open or close funds if conditions warrant. After review, the board has determined it would be in the best interests of the funds and its shareholders to close and liquidate the funds.

Both ETFs, which targeted companies with strong profitability, management expertise and cash flow, have recorded negative returns since inception.

QDFE has returned -9.3% since inception to the end of August while QVFE returned -7% versus -22.6% for the MSCI Emerging Market index.

The closures cut NTAM’s ETF range down to three with a combined $218m AUM, the largest of which is the FlexShares Listed Private Equity UCITS ETF (FLPE) with $200m AUM.

The remaining two, the FlexShares Developed Markets High Dividend Climate ESG UCITS ETF (QDFD) and the FlexShares Developed Markets Low Volatility Climate ESG UCITS ETF (QVFD), have $13m and $5.3m AUM, respectively.

NTAM entered the market with the two developed markets ETFs in February 2021, before launching their emerging market counterparts seven months later.

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