Three Years In, Objectives Trump Asset Class at an $8.5B ETF Shop
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Monday, October 20, 2014

Three Years In, Objectives Trump Asset Class at an $8.5B ETF Shop

Three years and $8.5-billion in AUM in, Northern Trust's [profile] FlexShares ETF business is all about long-term investors and their objectives.

Shundrawn Thomas, executive vice president and head of the funds managed accounts group at the Chicago-based asset manager, talked with MFWire about his strategy for the ETF business. He contrasted Northern Trust and FlexShares with other asset managers who "take more of a product-centric approach."

"If you start with a product development lens, you tend to think first in terms of asset class," Thomas says. "We think first in terms of an objective."

Thomas points to four fundamental investor objectives: generating income, growing assets, managing liquidity, and managing risks. He sees demographic trends, such as Baby Boomers starting to retire while younger generations rise, translating into different balances between those four fundamental objectives.

"Compared to the older generations, Gen Y is much more risk-averse," Thomas says. "You're going to continue to need to see continued innovation in development on the fixed income side."

(For example, FlexShares' first income-generating ETF is actually an equity ETF full of high quality, dividend-yielding stocks.)

The FlexShares team, Thomas says, also works closely with the index providers behind its 15 indexed ETFs, all of which track newly-created indexes.

"We are intimately involved with the development of our products from the very inception," Thomas says.

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