When you think of investing giant Northern Trust, you probably don’t think of exchange-traded funds, but that’s about to change. The firm launched FlexShares in the fourth quarter of 2011, and has already reached over $1 billion in assets. Part of its success is a focus on unique sectors and an “investor-focused framework.”
Shundrawn Thomas, head of Northern Trust’s exchange-traded funds group, took some time to explain FlexShares’ philosophy, and why taking on larger, established competitors isn’t as hard as one might think.
Why natural resources and TIPS; why those two sectors?
When we think about strategy, we think about our field as being very investor-centric. Most providers in the space have a product-centric focus. There’s nothing inherently wrong with that, but it’s more of a strategy that says, “Let’s look at the marketplace and see where there are product opportunities,” and then they develop products to fill that perceived market opportunity or need. Our approach is different. We say, “What are investors looking to achieve?”
“Tilted indexing” is something we haven’t heard of before. Please explain.