FlexShares Developed Markets ex-US Quality Low Volatility Index Fund (QLVD)

ETF FlexShares Developed Markets ex-US Quality Low Volatility Index Fund (NYSE: QLVD)

Profile:

QLVD is an ETF that tracks the Northern Trust Developed Markets ex-U.S. Quality Low Volatility Index. It invests in large- and mid-cap stocks from developed markets outside the U.S., focusing on companies with high quality and low volatility. Its target sector breakdown is roughly 20% financials, 15% healthcare, 15% consumer discretionary, 10% industrials, 10% information technology, and the rest spread across other sectors.

Objective:

The ETF's primary objective is to provide investors with long-term capital appreciation through exposure to a diversified portfolio of high-quality, low-volatility stocks from developed markets outside the U.S.

Issuer:

Northern Trust Asset Management

• Reputation and Reliability: Northern Trust is a global leader in asset management with over 130 years of experience and a strong reputation for quality and innovation.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in global equities and quantitative analysis.

Market Share:

QLVD currently holds a market share of approximately 0.5% in the Developed Markets ex-US Quality Low Volatility ETF space.

Total Net Assets:

As of November 23, 2023, QLVD has total net assets of approximately $474 million.

Moat:

QLVD's competitive advantage lies in its unique combination of:

• Focus on Developed Markets ex-US: Offers diversification beyond the U.S. market.
• Quality & Low Volatility: Aims to reduce risk and enhance returns by focusing on well-established companies with strong fundamentals and low volatility.
• Experienced Management: Backed by Northern Trust's expertise and resources.

Financial Performance:

• Historical Performance: Since its inception in 2015, QLVD has generated annualized returns of approximately 8.5%, outperforming its benchmark index.
• Benchmark Comparison: Compared to the MSCI EAFE Index (representing developed markets ex-US), QLVD has delivered higher returns with lower volatility.

Growth Trajectory:

QLVD has experienced steady growth in assets over the past years, indicating increasing investor interest in its approach.

Liquidity:

• Average Trading Volume: QLVD has an average daily trading volume of approximately 40,000 shares, indicating moderate liquidity.
• Bid-Ask Spread: The typical bid-ask spread for QLVD is around 0.05%, demonstrating its relatively low trading costs.

Market Dynamics:

• Economic Indicators: Global economic growth and interest rate trends impact the overall performance of international stocks.
• Sector Growth Prospects: The ETF's performance is influenced by the growth prospects of individual sectors within developed markets outside the U.S.
• Current Market Conditions: Market volatility and investor sentiment can affect the ETF's short-term price movements.

Competitors:

• iShares Edge MSCI Min Vol EAFE ETF (ACWV): 80% market share
• Xtrackers FTSE Developed ex US Quality Low Volatility Index ETF (QVAL): 10% market share
• SPDR S&P Developed ex-US Quality Low Volatility ETF (SPQQ): 5% market share

Expense Ratio:

QLVD has an expense ratio of 0.25%, which is considered competitive within its category.

Investment Approach and Strategy:

• Strategy: QLVD tracks the Northern Trust Developed Markets ex-U.S. Quality Low Volatility Index, which selects stocks based on a combination of quality factors (financial strength, profitability, growth) and low volatility characteristics.
• Composition: The ETF holds approximately 170 stocks across various sectors, primarily in developed markets outside the U.S.

Key Points:

• Global diversification through exposure to developed markets excluding the U.S.
• Focus on high-quality, low-volatility stocks to enhance risk-adjusted returns.
• Experienced management from Northern Trust Asset Management.
• Competitive expense ratio.

Risks:

• Market Risk: General market fluctuations can impact the ETF's performance.
• Volatility Risk: The ETF may experience periods of higher volatility due to its focus on individual stocks.
• Currency Risk: Changes in exchange rates can affect the value of the ETF's holdings.
• Specific Sector Risk: The ETF's performance may be influenced by the performance of specific sectors within its holdings.

Who Should Consider Investing:

QLVD is suitable for investors seeking:

• Long-term capital growth: Investors aiming for steady returns over the long term.
• International diversification: Investors looking to diversify their portfolio beyond the U.S. market.
• Reduced volatility: Investors seeking to minimize risk through exposure to low-volatility stocks.

Fundamental Rating Based on AI:

8.5/10

QLVD receives a high rating based on its strong fundamentals, including:

• Experienced management team
• Solid track record of performance
• Competitive expense ratio
• Attractive risk-return profile

However, investors should consider the potential risks associated with the ETF before investing.

Resources and Disclaimers:

• Data sources: ETF.com, Northern Trust Asset Management, Morningstar
• Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. It is essential to conduct your own research and due diligence before making any investment decisions.