Executive Vice President and Head of Funds and Managed Accounts
Northern Trust Corporation
Can you tell us a little bit about why you’re here today?
So today we’re excited to be here from Northern Trust with my colleagues from Northern Trust FlexShares, and many of our friends, to celebrate the five year anniversary of our initial listing of our FlexShares funds here at the New York Stock Exchange.
Would you like to tell us a little bit about the family of funds?
Absolutely. So starting out with four FlexShares listed funds – we have now grown our lineup of innovative ETFs to 24 funds – 23 of which are index listed funds that focus on alternatively weighted indexes that feature either factor-based approaches and/or other alternatively weighted schemes including focuses on key performance indicators.
You are now up to 24 FlexShares branded funds - how do you differentiate your value proposition from your competitors?
FlexShares is celebrating its 5th anniversary of the launch of its first ETF products and continues to be one of the fastest growing ETF providers in the industry.
Over the five years that we have been in the ETF market, one of the things that we’ve really focused on is our value proposition, which we refer to as an investor-centric value proposition.
First of all, we focus on four fundamental investor objectives of (1) growing their assets – or capital appreciation, (2) managing certain risks, (3) generating income in a portfolio and (4) finally of creating liquidity. We find that the time-tested fundamental objectives are critically important to not only end investors but the advisors that serve them.
Finally, part of our value proposition also extends itself to being innovative not only in our product design but also in our thought leadership in terms of the insights and the resources that we provide to the investors we serve.
How has the investment industry changed during this time and (how have you adapted to these changes)?
You know, we’ve had the great fortune of being involved in the ETF market during a time of really dynamic growth but also dynamic evolution.
One of the fastest trends that we’ve seen in the marketplace is a focus on, again, more alternatively weighted index strategies or so called “smart beta” or “strategic beta” strategies and we certainly have been not only a participant but a leader in that space.
Another thing that we’ve seen is really a shift of investors, increasingly, to use ETFs as more long term or strategic-oriented investments in portfolios – so not only investment advisors, but even institutional investors. And that speaks very specifically to our long term oriented approach. So we feel like we’ve not only participated but benefited from those trends.
Why have you focused on non-traditional index strategies or so-called smart beta?
We often are asked why we choose a particular focus on non-traditional index strategies. And it addresses several things.
First of all, having an investor-centric approach, we really wanted to focus on how we could add unique value to the marketplace. Also, when you look at our heritage at Northern Trust, we’re one the globe’s largest index providers, the 4th largest index provider. But also we have time tested and proven success in areas like quantitative research and over two decades of experience in factor based strategies. So when you bring all those unique qualities and capabilities together, that’s one of the things that really informed our focus and really infused our approach in terms of delivering these non-traditional index strategies.
As you look forward, what are the emerging areas of investor interest and where will you focus your innovation efforts?
Well, one of the things that we know about ETFs is that it’s highly dynamic and highly innovative. And as we look forward to the future, there are two things in particular that we’re looking forward to and we think will really focus some of our future development.
The first is the increased focus that we see investors have on being socially responsible. So you think of terms like sustainable investing, or impact investing. So we’re focused on looking at opportunities to deliver strategies, which take advantage of the factors of environmental, social, and governance – these key performance indicators we think will be increasingly important to investors and certainly we’ll see that in the ETF space.
The second thing we’re focused on is multi-asset class strategies. Increasingly investors are looking for total solutions that allow them to allocate to either sub-asset-classes or really across their portfolios. And from our standpoint, one of the most efficient ways to do that is through portfolios that allocate to ETFs.
So you increasingly see the marketplace, and certainly FlexShares, focus on those types of products.
How does it feel to be here at the New York Stock Exchange and ringing the Opening Bell?
You know, as I think about this experience, and I think about not only the five years since the launch of our fund, but really, the time preceding that – even coming up with our strategy.
It’s incredibly exciting to be here. It’s, in many respects, humbling to take part in this with not on my closest colleagues but those, in what I call our ecosystem – our friends and supporters who have made this possible. And so it’s an experience that we really take to heart. We really cherish, and we love sharing this with our partner, the New York Stock Exchange.
Listen to Shundrawn Thomas Explain FlexShares’ Investor-Centric Approach