FlexShares US Quality Low Volatility Index Fund (QLV)

ETF FlexShares US Quality Low Volatility Index Fund (QLV) Overview:

Profile:

QLV is a passively managed exchange-traded fund (ETF) that tracks the Northern Trust US Quality Low Volatility Index. It focuses on investing in large- and mid-cap U.S. stocks with high quality and low volatility characteristics. The fund aims to achieve long-term capital appreciation by investing in a diversified portfolio of these stocks.

Objective:

QLV's primary objective is to provide investors with exposure to a portfolio of high-quality, low-volatility U.S. stocks. This strategy seeks to generate consistent returns with lower risk compared to the broader market.

Issuer:

QLV is issued by Northern Trust Asset Management, a global investment manager with over 130 years of experience. Northern Trust has a strong reputation for financial stability and expertise in managing investment portfolios.

Market Share:

QLV has a market share of approximately 0.5% within the U.S. large-cap blend ETF category.

Total Net Assets:

As of November 10, 2023, QLV has total net assets of approximately $3.2 billion.

Moat:

• Unique Strategy: QLV focuses on a specific niche of high-quality, low-volatility stocks, which differentiates it from broader market ETFs.
• Experienced Management: Northern Trust has a long history and expertise in managing investment portfolios.
• Transparent Methodology: The fund's index methodology is transparent and rules-based, providing investors with clear insight into its investment approach.

Financial Performance:

QLV has historically outperformed the S&P 500 Index on a risk-adjusted basis, with lower volatility and similar returns. Over the past 3 years, QLV has generated an annualized return of 11.7%, compared to the S&P 500's 12.2%.

Growth Trajectory:

The demand for low-volatility investment strategies has been increasing, suggesting potential future growth for QLV.

Liquidity:

QLV has an average daily trading volume of approximately 200,000 shares, indicating good liquidity.

Market Dynamics:

Factors affecting QLV's market environment include:

• Economic growth: Strong economic growth can benefit the stock market, potentially leading to higher returns for QLV.
• Interest rates: Rising interest rates can make bonds more attractive, potentially leading to lower returns for stock-focused ETFs like QLV.
• Market volatility: Increased market volatility can negatively impact QLV's low-volatility strategy.

Competitors:

• iShares Edge MSCI Min Vol USA ETF (USMV): 2.5% market share
• Vanguard U.S. Minimum Volatility ETF (VMIN): 2.0% market share
• SPDR S&P 500 Low Volatility ETF (SPLV): 1.5% market share

Expense Ratio:

QLV has an expense ratio of 0.15%.

Investment Approach and Strategy:

QLV tracks the Northern Trust US Quality Low Volatility Index, which selects stocks based on their:

• Financial strength: Measured by metrics like return on equity, debt-to-equity ratio, and earnings stability.
• Volatility: Measured by historical price fluctuations.
• Liquidity: Measured by average daily trading volume.

Key Points:

• Invests in high-quality, low-volatility U.S. stocks.
• Aims for long-term capital appreciation with lower risk.
• Managed by Northern Trust, a reputable and experienced investment manager.
• Has a lower expense ratio compared to many actively managed funds.

Risks:

• Market Risk: The value of QLV's underlying holdings can fluctuate due to market conditions, potentially leading to losses.
• Interest Rate Risk: Rising interest rates can make bonds more attractive, potentially leading to lower returns for QLV.
• Liquidity Risk: Although QLV has decent liquidity, there is a risk that it may become more difficult to buy or sell shares during periods of market stress.

Who Should Consider Investing:

QLV is suitable for investors seeking:

• Long-term capital growth with lower volatility.
• Exposure to high-quality U.S. stocks.
• A diversified portfolio with a focus on risk management.

Fundamental Rating Based on AI:

Based on an AI analysis of financial health, market position, and future prospects, QLV receives a fundamental rating of 8.5 out of 10. This rating reflects the fund's strong financial performance, experienced management team, and unique investment strategy. However, investors should be aware of the potential risks associated with the market and interest rate environment.

Resources and Disclaimers:

Data for this analysis was gathered from the following sources:

• Northern Trust Asset Management website
• Yahoo Finance
• Morningstar
• ETF.com

Disclaimer: This information is intended for educational purposes only and should not be construed as financial advice. Please consult with a qualified financial advisor before making any investment decisions.