Company News »

FlexShares Launches Disciplined Duration MBS Index ETF

Business Wire
Share on StockTwits
Published on

FlexShares(R) Exchange Traded Funds, sponsored and managed by Northern Trust, today introduced the FlexShares Disciplined Duration MBS Index Fund (NASDAQ: MBSD), a fixed income portfolio consisting of investment-grade U.S. agency mortgage-backed pass-through securities (“MBS”) issued by U.S. government agencies: the Federal National Mortgage Association (FNMA or Fannie Mae), the Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) or the Government National Mortgage Association (GNMA or Ginnie Mae). The Fund targets an average effective duration of 3.75 years, with an admissible range between 3.25 and 4.25 years.

The FlexShares(R) Disciplined Duration MBS Index Fund features:

  • An accessible and efficient investment product which provides fixed income MBS sector exposure
  • Residential agency fixed-rate MBS exposure (excludes adjustable-rate or hybrid mortgages)
  • Constrained effective duration, which may help generate incremental returns with lower volatility
  • An index-based strategy with competitive fees

“With our ongoing focus on real-world investor needs, we developed this Fund as an income generation tool that offers investors the unique characteristics of the mortgage-backed securities (MBS) sector,” said Shundrawn A. Thomas, Executive Vice President and Head of Northern Trusts’ Funds and Managed Accounts Group. “The FlexShares(R) Disciplined Duration MBS Index Fund is designed to help investors generate income and diversify their fixed income exposure while dampening the volatility that can result from duration risk.”

The Underlying Index is The BofA Merrill Lynch Constrained Duration US Mortgage Backed Securities Index (“M375″), an alternatively-weighted index composed of 15-year, 20-year and 30-year fixed rate residential agency mortgage pools sponsored by Merrill Lynch, Pierce, Fenner & Smith Incorporated (the “Index Provider”). The Index Provider determines the composition and relative weightings of the securities in the Underlying Index in accordance with a published methodology and is reconstituted on a monthly basis.

For more information, please visit

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

Foreside Fund Services, LLC, distributor.

About FlexShares

FlexShares Exchange Traded Funds are designed to pursue specific investment goals across both passive and active strategies. FlexShares offers differentiated ETF strategies that improve and simplify the investment decision process for the long-term investor. For more information, please visit

About Northern Trust

Northern Trust Corporation (NASDAQ:NTRS) is a leading provider of investment management, asset servicing, fund administration, fiduciary and banking solutions for corporations, institutions, families and individuals worldwide. Chicago-based Northern Trust has offices in 19 states, Washington, D.C., and 19 international locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of June 30, 2014, Northern Trust had assets under custody of US$6 trillion, and assets under investment management of US$924.4 billion. For 125 years, Northern Trust has earned distinction as an industry leader in combining exceptional service and expertise with innovative products and technology. For more information, visit and follow us on Twitter @NorthernTrust.

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. The Funds are subject to the following principal risks: asset class; commodity; concentration; counterparty; currency; derivatives; dividend; emerging markets; equity securities; fluctuation of yield; foreign securities; geographic; income; industry concentration; inflation-protected securities; infrastructure-related companies; interest rate / maturity risk; issuer; management; market; market trading; mid cap stock; MLP; natural resources; new funds; non-diversification; passive investment; privatization; small cap stock; tracking error; value investing; and volatility risk. A full description of risks is in the prospectus.

In addition, FlexShares Disciplined Duration MBS Index Fund (NASDAQ:MBSD) is subject to credit risk, which is the risk that the inability or unwillingness of an issuer or guarantor of a fixed-income security, or a counterparty to a TBA, repurchase or other transaction, to meet its payment or other financial obligations will adversely affect the value of the Fund’s investments and its returns. Changes in the credit rating of a debt security held by the Fund could have a similar effect. Debt extension risk is the risk that an issuer will exercise its right to pay principal on an obligation held by the Fund (such as a mortgage-backed security) later than expected. This may happen during a period of rising interest rates. Under these circumstances, the value of the obligation will decrease and the Fund will suffer from the inability to invest in higher yielding securities. Mortgage-backed pass-through securities risk is the risk of investing in mortgage-backed securities issued by a U.S. Agency. These securities may not be backed by the full faith and credit of the U.S. government. As interest rates rise, bond prices fall, reducing the value of fixed income investments.

About the Index Provider

Merrill Lynch, Pierce, Fenner & Smith Incorporated and/or its affiliates compile and publish the Underlying Index. Merrill Lynch, Pierce, Fenner & Smith Incorporated and its affiliates (“BofA Merrill Lynch”) indices and related information, the name “BofA Merrill Lynch”, and related trademarks, are intellectual property licensed from BofA Merrill Lynch, and may not be copied, used, or distributed without BofA Merrill Lynch’s prior written approval. The licensee’s products have not been passed on as to their legality or suitability, and are not regulated, issued, endorsed, sold, guaranteed, or promoted by BofA Merrill Lynch. BOFA MERRILL LYNCH MAKES NO WARRANTIES AND BEARS NO LIABILITY WITH RESPECT TO THE INDICES, ANY RELATED INFORMATION, ITS TRADEMARKS, OR THE PRODUCT(S) (INCLUDING WITHOUT LIMITATION, THEIR QUALITY, ACCURACY, SUITABILITY AND/OR COMPLETENESS).

Share on StockTwits