(Multi-Asset Channel) - Even while the effects of the ongoing pandemic are slowly dissipating, the risk of default is always apparent when investing in corporate debt issues, which can be addressed with a pair of FlexShares ETFs.
Focusing on quality debt is available in the convenience of an ETF wrapper with funds like the FlexShares Credit-Scored US Long Corporate Bond Index Fund (LKOR C+). The fund focuses on the longer end of the yield curve, which can be ideal for yield.
LKOR seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust U.S. Long Corporate Bond Index. The underlying index reflects the performance of a broad universe of U.S. dollar-denominated investment-grade corporate bonds that can potentially deliver a higher total return than the overall investment-grade corporate bond market, as represented by the Northern Trust U.S. Investment Grade Long Corporate Bond Index.
“The FlexShares Credit-Scored U.S. Long Corporate Bond Index Fund (LKOR) follows a proprietary index of investment-grade debt with maturities of 10 years or longer, but with a twist characteristic of Northern Trust’s FlexShares lineup,” an ETF Database analysis said. “The index scores bonds by evaluating the issuers’ value and quality by looking at measures like solvency, profitability, and management efficiency. The index weights the portfolio towards those with the highest scores while those with the worst performance are excluded. Then, to preserve diversification, the methodology limits the weight of individual bonds, issuers, sectors, duration and turnover.”
An Intermediate Duration Option
Intermediate duration can give investors yield, but without the additional rate risk that longer maturities offer. Intermediate corporate bond exposure can be had with the FlexShares Credit-Scored US Corporate Bond Index Fund (SKOR B).
SKOR seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust U.S. Corporate Bond Index. The underlying index reflects the performance of a broad universe of U.S. dollar-denominated investment-grade corporate bonds that can potentially deliver a higher total return than the overall investment-grade corporate bond market, as represented by the Northern Trust U.S. Investment Grade Corporate Bond Index.
“The FlexShares Credit-Scored U.S. Corporate Bond Index Fund (SKOR) is part of Northern Trust’s sizable stable of ETFs built with the firm’s twist on factor investing,” an ETF Database analysis said. “SKOR follows a proprietary index that looks for investment-grade bonds maturing in one to 10 years. SKOR then uses an in-house scoring strategy to weight those bonds based on measures of the issuer’s quality and value, such as profitability and solvency.”
Ben Hernandez
Nov 01, 2021
