Northern Trust Asset Management has expanded its FlexShares brand with the introduction of three new fixed income ETF families, adding a combined 11 funds targeting municipal bonds, inflation-linked bonds, and core muni exposure. The action is intended to provide investors with more effective means of managing income, inflation risk, and portfolio diversification.
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The suite features two suites designed around a groundbreaking “distributing ladder” approach — municipal bonds and inflation-linked bonds. A third suite offers low-cost, index-based muni exposure in various maturities.
Distributing Ladder Technology
The laddered muni suite consists of four funds: the Northern Trust 2030 Tax-Exempt Distributing Ladder ETF (NYSE:MUNA), 2035 (NYSE:MUNB), 2045 (NYSE:MUNC), and 2055 (NYSE:MUND). Each fund has “rungs” maturing in consecutive years, paying back principal each year rather than reinvesting it. For instance, MUNA contains bonds maturing between 2026 and 2030, with stable income and flexibility.
This patent-pending design is also used in inflation-linked securities. The Northern Trust 2030 Inflation-Linked Distributing Ladder ETF (NYSE:TIPA), 2035 (NYSE:TIPB), 2045 (NYSE:TIPC), and 2055 (NYSE:TIPD) invest mainly in Treasury Inflation-Protected Securities (TIPS). The structure benefits from offsetting chronic inflation pressures by paying monthly income and annual principal, as well as providing investors with the ability to dictate how capital returned is utilized.
Core Muni Exposure
For individuals who desire traditional muni exposure, Northern Trust introduced three index-tracking ETFs with only 0.05% expense ratios: the Short Term Tax-Exempt Bond ETF (NASDAQ:TAXS), the Intermediate Tax-Exempt Bond ETF (NASDAQ:TAXI), and the all-maturities Tax-Exempt Bond ETF (NASDAQ:TAXT).
Market Context
The launches come at a time when inflation remains a stubborn challenge for bond investors. Inflation-linked funds are designed to help cushion portfolios from eroding purchasing power, while municipal bonds remain popular for their tax-advantaged yields.
With the added products, Northern Trust is positioning its FlexShares brand to satisfy investor demand for innovation and low-cost core bond exposure.
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