Category Archives: Investment

Ep 12: The Hard Hits to Infrastructure — With Chris Huemmer and Dan Phillips



Infrastructure has taken some of the hardest hits during the global pandemic. But what does infrastructure actually mean?

In this episode, we talk with Chris Huemmer, senior investment strategist, and Dan Phillips, director of asset allocation at Flexshares. They discuss how infrastructure has been impacted during the global pandemic, and the decisions that will soon have to be concluded in our rapid environment. 

Chris and Dan discuss: 

  • Key benefits infrastructure can offer investors
  • The options available to an investor interested in infrastructure
  • The two-fold challenges investors need to be aware of within the infrastructure space

Resources:

Connect With Flexshares:

About Our Guests:

Christopher Huemmer: Chris Huemmer is the senior investment strategist for Northern Trust Asset Management. Chris is responsible for equity strategy and provides equity product development, investment strategy and related ETF product expertise to the team. Chris serves as the catalyst and conduit for turning Northern Trust Asset Management’s investment thought leadership into successful ETF products.

Daniel Phillips: Daniel Phillips is the director of asset allocation strategy for Northern Trust Asset Management. Daniel is responsible for overseeing the firm’s asset allocation process and communicating the firm’s opinions to clients. Daniel is an Investment Policy Committee member, and portfolio manager for Northern Trust’s Global Tactical Asset Allocation Fund. Daniel is part of a team of experts across various disciplines and geographic locales that produce long-term asset class forecasts, set tactical and strategic portfolio allocations and recommendations.

Definitions:

  • Cash flow: is the net amount of cash and cash equivalents being transferred into and out of a business.
  • Treasury Inflation-Protected Security (TIPS) is a Treasury bond that is indexed to an inflationary gauge to protect investors from the decline in the purchasing power of their money.
  • Consumer Price Index (CPI):  is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

Disclosures: 

“Diversification does not assure a profit, nor does it protect against a loss in a declining market.”


Ep 11: Natural Resources Are Hot — With Mark Carlson and Daniel Phillips



There’s a shortage of supplies all across the global economy and prices continue to increase. Several factors are driving this crunch which has all eyes on inflation. 

In this episode, Mark Carlson, senior investment strategist, and Daniel Phillips, director of asset allocation strategy at Northern Trust Asset Management (NTAM). They discuss the hot natural resource sector and how FlexShares Morningstar global natural resource index ETF, ticker symbol, GUNR could offer investors economical balance and efficient exposure to these natural resource markets.

Mark and Daniel discuss: 

  • Why so many natural resource markets are running so hot
  • The hottest segments in the market
  • How the team at NTAM incorporate natural resources into client portfolios

Connect With Flexshares:

 

Resources

GUNR

About Our Guests:

Mark Carlson: Mark Carlson, is a Senior Vice President at The Northern Trust Company, Chicago. Mark is the Senior Fixed Income Investment Strategist in the Exchange Traded Funds Group of Northern Trust Global Investments. He is responsible for developing and applying innovative investment strategies to support fixed income and related ETFs for NTGI’s FlexShares products. 

Daniel Phillips: Daniel Phillips, is the director of asset allocation strategy for Northern Trust Asset Management. Daniel is responsible for overseeing the firm’s asset allocation process and communicating the firm’s opinions to clients. Daniel is an Investment Policy Committee member, and portfolio manager for Northern Trust’s Global Tactical Asset Allocation Fund. Daniel is part of a team of experts across various disciplines and geographic locales that produce long-term asset class forecasts, set tactical and strategic portfolio allocations and recommendations.


Ep 10: Systematic Ways To Invest with Factors — With Chris Huemmer



Factors can identify systematic ways to invest that have historically been tested and are tied to economic rationales. These can lead to statistically significant incremental returns over time.

In this episode, Christopher Huemmer, senior investment strategist at FlexShares discusses how factors have performed in the U.S market.

In this episode, you will learn:

  • How to identify factors that fluctuate ETFs
  • How to use different factors
  • Insight on what factors performed well from 2020 to the first quarter of 2021

Play this full episode to hear Chris discuss factor exposures on the market.

Resources: FlexShares | Christopher Huemmer on LinkedIn


Ep 9: The Impact of Inflation on Portfolios — with Mark Carlson and Ellen Chenoweth



Inflation continues to be top of mind for listeners and market participants alike with interest rates and inflation expectations on the rise this year. 

In this episode, we talk with Mark Carlson and Ellen Chenoweth, two of FlexShares Investment Strategists to share their perspectives on the impact of inflation on portfolios. 

In this episode you will learn:

  • The key drivers when evaluating for potential inflation to portfolios
  • Why investors often turn to “tips” as a first line of defense against rising inflation
  • How every portfolio could benefit from a strategic allocation to natural resources 

Play this full episode to hear Mark and Ellen, share perspectives on why you should be focusing on the future impact of inflation on your portfolio.

Chu, Quentin C., Pittman, Deborah N., Yu, Linda Q., “When Do TIPS Prices Adjust to Inflation Information?” Financial Analysts Journal, Vol. 67, No. 2

Resources: FlexShares | Mark Carlson on LinkedIn | Ellen Chenoweth on LinkedIn

Definitions: 

Negative roll yield occurs when a market is in contango, which is the opposite of backwardation.

Contango is a situation in which the futures price of a commodity is above the spot price.

Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other.

The price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings (EPS).

Before investing, carefully consider the FlexShares investment objectives, risks, charges and expenses. This and other information are in the prospectus, a copy of which may be obtained by visiting www.flexshares.com. Read the prospectus carefully before you invest.

Foreside Fund Services, LLC, distributor.

Fixed income investments involve risks including credit risk, interest rate risk, default risk, and prepayment and extension risk. In general, bond prices rise when interest rates fall. .As the demand for or prices of natural resources increase, the Fund`s equity investment generally would be expected to also increase. Conversely, declines in demand for or prices of natural resources generally would be expected to cause declines in value of such equity securities. Such declines may occur quickly and without warning and may negatively impact your investment in the Fund.

 


Ep 8: The Trend of ESG Continues into 2021 — With Evan McCall



If investors thought ESG would go away, 2020 really caught them by surprise. In 2021, experts are still projecting ESG assets to reach more than one-third of global assets under management in 2025.

In this episode, Evan McCall, Second VP investment strategist in asset management for FlexShares exchange traded funds, discusses one of the more attention-grabbing investment categories known as environmental, social, and governance. We’ll dive into how the market concentration has changed due to the global pandemic and what’s next for ESG.

In this episode you will learn:

  • What is ESG (environmental, social, and governance)
  • The conditions of the ESG space before COVID-19
  • The recent developments in ESG
  • What may happen to ESG going forward

Listen as Evan, shares insight on the true impact of ESG.

Resources: FlexShares | Evan McCall | ESG | ESGG | ESG Performance Impact | ESGG Performance Impact

Definitions:

  • Basis point: Basis points, otherwise known as bps or “bips,” are a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument.
  • MSCI World Index:  is a stock index that tracks about 3,000 stocks in 49 developed and emerging market countries, representing a total market capitalization of tens of trillions of dollars
  • Russell 1000 Index: a subset of the Russell 3000 Index, represents the 1000 top companies by market capitalization in the United States.
  • S&P 500 Index: The S&P 500 Index, or the Standard & Poor’s 500 Index, is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies.
  • KPI: Key performance indicators (KPIs) measure a company’s success versus a set of targets, objectives, or industry peers.
  • Tracking error: the divergence between the price behavior of a position or a portfolio and the price behavior of a benchmark.

Key Performance Indicators (KPIs) are a measurable value (i.e. not subjective) that demonstrate how effectively a company is achieving a particular key business objective. Essential general criteria for KPIs:

  • Depict a correlation to risk or success factors within a corporate business
  • Significant and relevant for investment decisions
  • Firmly anchored in the corporate management system
  • Quantified, comparable, and benchmarkable from peer to peer
  • Depict dynamics, i.e. from reporting period to reporting period
  • Manageable in dimension

The STOXX® USA ESG Select KPIs Index and the STOXX® Global ESG Select KPIs Index selection process also seeks to identify the materiality of each KPI and ideally distinguish those that may significantly impact risk/return with strong predictability.

Based on the above criteria, KPIs that were selected and weighted:

  • CDP emission/energy reduction targets
  • Percentage of women on the board
  • Percentage of independent directors
  • Policy against child labor
  • Golden parachute agreements

In addition coal miners, violators of United Nations Global Compact principles, and companies involved with controversial weapons are excluded.

Disclosures:

Diversification does not assure a profit nor protect against loss in the current market

Before investing, carefully consider the FlexShares investment objectives, risks, charges and expenses.  This and other information are in the prospectus and summary prospectus, copies of which may be  obtained by visiting www.flexshares.com. Read the prospectus carefully before you invest. 

Foreside Fund Services, LLC, distributor.

FUND RISKS

An investment in FlexShares is subject to numerous risks, including possible loss of principal. Fund returns may not match the return of the respective indexes. A full description of risks are in the prospectus and summary prospectus. FlexShares STOXX® Global ESG Impact Index Fund (ESGG) is passively managed and uses a representative sampling strategy to track its underlying index. Use of a representative sampling strategy creates tracking risk where the Fund`s performance could vary substantially from the performance of the underlying index. The Fund is subject to environmental, social and governance (ESG) Investment  Risk, which is the risk that because the methodology of the Underlying Index selects and assigns weights to securities of issuers for non-financial reasons, the Fund may underperform the broader equity market or other funds that do not utilize ESG criteria when selecting investments. The Fund is also at increased risk of industry concentration, where it may be more than 25% invested in the assets of a single industry.  Investments in foreign market securities involve certain risks such as currency volatility, political and social instability and reduced market liquidity.

To the extent that the Fund invests in Emerging markets, those investments may be subject to increased price volatility and may be more susceptible to adverse economic, market, political or regulatory  occurrences affecting that country, market, industry, sector or asset class. The Fund may also invest in derivative instruments. Changes in the value of the derivative may not correlate with the underlying asset,  rate or index and the Fund could lose more than the principal amount invested. The STOXX® Global ESG  Impact Index is the intellectual property (including registered trademarks) of STOXX® Limited, Zurich,  Switzerland and/or its licensors (“Licensors”), which is used under license. The securities based on the  Index are in no way sponsored, endorsed, sold or promoted by STOXX® and its Licensors and neither of the Licensors shall have any liability with respect thereto. Price to Earnings is calculated as a company’s current stock price divided by its earnings per share. Price to Book is calculated as the market value of all common stock shares of a company divided by the book value of the company. All data provided by:  Northern Trust, J.P. Morgan, Rimes, Morningstar and Refinitiv

Performance data quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed or sold in the secondary market, may be worth more or less than the original cost. Investors will incur usual and customary brokerage commissions when buying or selling shares of the exchange-traded funds  (“ETFs”) in the secondary market, and that, if reflected, the brokerage commissions would reduce the performance returns. Current performance may be lower or higher than the performance shown. Shares are bought and sold at market price not net asset value (“NAV”) and are not individually redeemable from the fund. Call 855-FLEXETF (855-353-9383) for more information.

Click here for ESG standardized performance and index definitions 

Click here for ESGG standardized performance and index definitions 


Ep 7: Probability of Success with Low Volatility — With Chris Huemmer



Are you an investor using the low volatility approach in today’s environment?

In this episode, Christopher Huemmer, senior investment strategist at FlexShares to discusses how to use low volatility strategies as a way to seek to offer some level of downside protection while delivering potential upside participation to stay exposed to the equity markets.

In this episode you will learn:

  • The low volatility factor and why some investors find it as an attractive way to invest
  • Why low volatility exists and its trend
  • What investors need to know about low volatility investing
  • Using quality in addition to the low volatility investment approach

Listen as Chris shares insight into investing with the low volatility approach!

Resources:  FlexShares | Chris Huemmer on LinkedIn

VIX Index is a real-time market index representing the market’s expectations for volatility over the coming 30 days.

The S&P 500 or simply the S&P, is a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States.

Beta is a measure of a stock’s volatility in relation to the overall market. … If a stock moves less than the market, the stock’s beta is less than 1.0.

Diversification does not assure a profit nor protect against loss in a declining market.


Ep 6: Areas of Focus For Investors — with Ellen Chenoweth and Chris Huemmer



The year 2020 has been universally challenging for all of us and has brought on so many surprises, certainly one for the history books.

In this episode, we talk with Ellen Chenoweth, associate investment strategist for FlexShares exchange traded funds and Chris Huemmer, senior investment strategist at FlexShares. The two investment strategists share their perspective on the year ahead and three ideas to implement in portfolios. 

In this episode you will learn:

  • What the key points that may impact the outlook for 2021
  • A highlighted look at dividend stocks
  • Why there is a focus on avoiding large sector bets and focusing on quality dividend paying companies
  • How the environment and the search for yield can impact the high yield segment
  • Value investing – and why investors may want to focus on this in the high yield segment

Listen in as Ellen and Chris discuss the areas of focus for investors!

Resources: FlexShares | Ellen Chenoweth on LinkedIn | Chris Huemmer on LinkedIn

 


Ep 5: High Yield Marketplace- Evaluating The Risks — With Ellen Chenoweth



There’s still a lot of uncertainty regarding the future of the marketplace, and investors are scrambling to generate income while some may feel high yield is too risky.  

In this episode Ellen Chenoweth, associate investment strategist for FlexShares exchange traded funds, explores some of the implications and market drivers, portfolio diversification, and contemporary ways to assess the high yield market. 

In this episode you will learn:

  • How high yield can be used in a portfolio
  • The market risks affecting high yield- what you should pay attention to
  •  If defaults follow a similar similar pattern
  • Why investors should consider the asset class
  • How investors can implement contemporary quantitative tools in their portfolios

Listen in as Ellen discusses the everchanging high yield marketplace and how investors are adapting!

Resources: FlexShares | Ellen Chenoweth on LinkedIn | FlexShares Case for High Yield White Paper |  Risk-Free Rate of Return | Embedded option


Ep 4: Zero Interest Rate Policy (ZIRP) – The Remake No Investor Really Wanted to See — With Mark Carlson



Some Investors have seen this movie before and therefore they may possess a better understanding of the needed investment actions in response to ZIRP the remake.

In this episode Mark Carlson, Senior  Investment Strategist for Northern Trust FlexShares ETFs review of the remake edition of ZIRP and discussions of ideas investors can pursue to address their liquidity investing objectives during a ZIRP environment

In this episode, you will learn:

  • What is different this time with ZIRP 2020
  • What happened in 2020 to disrupt the sector 
  • What FlexShares has done in an effort to try and address the issues within fixed income strategy to help investors through these challenging periods of managing  short-term liquidity assets 
  • How you may want to consider utilizing the investment strategy behind RAVI in today’s volatile and uncertain markets 

Listen in to hear how Mark believes that today’s ZIRP is a remake that most investors never wanted to see made

Resources:FlexShares | Mark Carlson on LinkedIn |

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