The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the STOXX® USA ESG Impact IndexSM (Underlying Index).
1. Track STOXX® index designed to serve as a core equity holding with Environmental, Social and Governance (ESG) exposure in an effort to enhance risk adjusted returns
2. Index assesses US companies based on Key Performance Indicators (KPIs) in ESG categories
3. Index aggregates criteria into one score and "tilts" the portfolio to companies with the highest scores
4. Constraints are utilized in an effort to minimize overall risk within the strategy
2:57 | ESG Integration Process | Transcript
Learn how we are investing in companies that are making a positive impact on the environment, social issues, and governance while exhibiting positive risk versus return.
Many investors have discrete goals in mind when they consider long-term growth of their investment portfolios. A few of the common goals include retirement savings, education plans, capital purchases, bequests and/or charitable intentions. Capital appreciation emphasizes the components of an investment portfolio dedicated to achieving long-term goals. It goes beyond wealth preservation and focuses on potential return on principal. There is an expansive array of investment options with an emphasis on equities. FlexShares capital appreciation strategies may complement investor’s portfolios by offering targeted solutions that seek to meet specific goals over defined time horizons. Risk-adjusted returns, risk tolerance, time horizon and performance expectations are key considerations when designing and delivering capital appreciation solutions.
The STOXX® USA ESG Impact Index offers exposure to a set of U.S. companies that is tilted towards companies scoring better with respect to a select set of environmental, social, and governance (ESG) key performance indicators (KPIs). Eligible U.S. securities are selected from the STOXX® Global 1800 Index. The bottom 50% of such companies based on their ESG KPI scores are excluded from the Index, as are companies that do not adhere to the UN Global compact principles, are involved in controversial weapons or are coal miners (ICB Subsector 1771). Components are then weighted by free-float market cap combined with a cap factor that is based on a company’s aggregate ESG KPI score. Component weightings may also be adjusted to ensure that the weight of a single company is less than 5% at time of each index rebalancing or reconstitution.