A smart beta exchange traded fund, the FlexShares Credit-Scored US Corporate Bond ETF (SKOR) debuted on 11/12/2014, and offers broad exposure to the Investment Grade Corporate Bond ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by Flexshares, SKOR has amassed assets over $558.36 million, making it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. Before fees and expenses, this particular fund seeks to match the performance of the Northern Trust Credit-Scored US Corporate Bond Index.
The Northern Trust US Corporate Bond Quality Value Index measures the performance of a diversified universe of intermediate maturity, US - dollar denominated bonds of companies with investment grade credit quality, favourable valuations and enhanced short-term and long-term solvency.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.15%.
The fund has a 12-month trailing dividend yield of 5.20%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Taking into account individual holdings, Citigroup Inc Callable Notes Variable 25/may/2034accounts for about 0.35% of the fund's total assets, followed by Cash and Bank Of America Corp Callable Notes Variable.
SKOR's top 10 holdings account for about 2.95% of its total assets under management.
Performance and Risk
So far this year, SKOR has gained about 5.54%, and is up about 5.32% in the last one year (as of 09/03/2025). During this past 52-week period, the fund has traded between $47.30 and $49.21.
The fund has a beta of 0.22 and standard deviation of 4.61% for the trailing three-year period, which makes SKOR a high risk choice in this particular space. With about 1680 holdings, it effectively diversifies company-specific risk .
Alternatives
FlexShares Credit-Scored US Corporate Bond ETF is a reasonable option for investors seeking to outperform the Investment Grade Corporate Bond ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
SPDR Portfolio Intermediate Term Corporate Bond ETF (SPIB) tracks Bloomberg Barclays Intermediate U.S. Corporate Index and the Vanguard Intermediate-Term Corporate Bond ETF (VCIT) tracks Bloomberg Barclays U.S. 5-10 Year Corporate Bond Index. SPDR Portfolio Intermediate Term Corporate Bond ETF has $10.66 billion in assets, Vanguard Intermediate-Term Corporate Bond ETF has $54.04 billion. SPIB has an expense ratio of 0.04% and VCIT changes 0.03%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Investment Grade Corporate Bond ETFs
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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FlexShares Credit-Scored US Corporate Bond ETF (SKOR): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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