FlexShares Launches New STOXX Global Broad Infrastructure Index Fund

FlexSharesFlexShares, the ETF brand from Chicago-based Northern Trust, has already made waves in its short time on the market. The new ETF provider has just over a dozen funds in its offering, and it has already seen a solid level of interest in a few of its choices, including close to $2 billion in both iBoxx 3-Year Target Duration TIPS Index Fund (NYSEARCA:TDTT) and the Morningstar Global Upstream Natural Resources Index ETF (NYSEARCA:GUNR).

Thanks to this success, FlexShares hasn’t been shy about putting out new products on to the market. The company is now continuing this trend with a fresh focus on international markets to beef up its product lineup (see FlexShares Releases 3 New Dividend ETFs).

The latest few funds have been targeting foreign dividend markets including products focused on quality, defensive names, and a ‘dynamic’ international product as well. In continuing with this theme, FlexShares has now put out another new ETF, this time targeting foreign infrastructure companies with its STOXX Global Broad Infrastructure Index Fund (NYSEARCA:NFRA).

This new ETF looks to charge investors 47 basis points a year in fees and will provide investors with diversified exposure to global companies that have infrastructure ownership. While there is a bit of competition in this space, this may be a potentially better way to play the sector and we have highlighted some of the key points regarding this new FlexShares fund below:

NFRA in Focus

This ETF follows the STOXX Global Broad Infrastructure index, holding companies that are in any of the following business lines; traditional utilities, energy, transportation, communications, and government outsourcing/social infrastructure. In total, the ETF holds roughly 150 names in its basket with a heavy focus on large cap firms (read Active Large Cap ETFs: Best of Both Worlds?).

In terms of sectors, energy, communication, and transportation all take up a good chunk of assets and combine to make up nearly 85% of the portfolio. The U.S. leads from a national look at nearly 40% of the total, while Japan, the UK, and Canada all receive double digit allocations as well. Top individual holdings include AT&T (T), Vodafone (VOD), and Union Pacific (UNP) although all of them account for less than 4.25% each.

How does this fit in a portfolio?

FlexShares believes that this segment is a solid pick for investors seeking a defensive play that has a low correlation to other sectors of the global economy. The sector can also be a good yield play, as many securities in the infrastructure space pay out robust yields.

Pages: 1 2

Leave a Reply

Your email address will not be published. Required fields are marked *