FlexShares, a European sub-brand of Northern Trust, is launching two emerging markets ETFs that try to be both smart beta and ESG funds.
- FlexShares Emerging Market High Dividend Climate ESG UCITS ETF (QDFE)
- FlexShares Emerging Market Low Volatility Climate ESG UCITS ETF (QVFE)
QDFE starts out by screening companies based on quality characteristics, even though it is not mentioned in the fund name. Quality characteristics include profitability, free cash flow and management efficiency.
It then targets companies with high dividend yields that meet certain climate criteria such as having satisfactorily low carbon footprints and adequate governance standards by their sectors standards. FlexShares’ website currently says the fund holds 50% cash, meaning its either wrong or the portfolio hasn’t been fully bought.
QVFE will also start by looking at companies that meet quality characteristics too. It will then pick stocks with lower overall volatility while also keeping an eye on climate friendliness.
FlexShares has partnered with index company Qontigo, to develop the indexes the funds track.
They charge 0.35% and 0.31%, respectively.