The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar® Developed Markets ex-US Factor Tilt Hedged IndexTM (Underlying Index).
1. "Tilt" the portfolio to the small cap and value segments of the developed markets equity universe
2. Exposure to 97% of the investable market in 22 countries outside the US while minimizing turnover
3. Hedge currency exposure, using one-month forwards, to reduce potential volatility
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 Morningstar® Developed Markets ex-US Factor Tilt Hedged IndexSM (the Currency Hedge Index) measures the performance of the Morningstar® Developed Markets ex-US Factor Tilt IndexSM (the Benchmark Index) after applying a practical hedging program, limiting the effects of currency fluctuations. Hedging each foreign currency in the portfolio, relative to an investor's home currency, is a close estimation of the return a local investor can achieve. The U.S. dollar is the default home currency for the Currency Hedge Index. The Currency Hedge Index is long the Benchmark Index and short currency forwards whose notional amount is based on market capitalization of foreign currencies in the Benchmark Index. In other words, the hedge ratio, that is, the proportion of the portfolio's currency exposure that is hedged is set to 100%..