Making its debut on 11/12/2014, smart beta exchange traded fund FlexShares Credit-Scored US Corporate Bond ETF (SKOR) provides investors broad exposure to the Investment Grade Corporate Bond ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $680.68 million, this makes it one of the average sized ETFs in the Investment Grade Corporate Bond ETFs. SKOR is managed by Flexshares. This particular fund, before fees and expenses, 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.15% for SKOR, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 4.68%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Cash (USD_CCASH) accounts for about 0.95% of the fund's total assets, followed by Bank Of Nova Scotia/the Callable Bond Variable-8.63% (0641598S8) and Broadcom Inc Callable Notes Fixed 4.6% 15/jul/2030 (11135FCK5).
The top 10 holdings account for about 4.63% of total assets under management.
Performance and Risk
Year-to-date, the FlexShares Credit-Scored US Corporate Bond ETF has added roughly 0.45% so far, and was up about 6.31% over the last 12 months (as of 03/11/2026). SKOR has traded between $47.30 $49.50 in this past 52-week period.
SKOR has a beta of 0.23 and standard deviation of 3.80% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 1674 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.
State Street SPDR Portfolio Intermediate Term Corporate Bond ETF (SPIB) tracks Bloomberg Barclays Intermediate U.S. Corporate Index and the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) tracks Bloomberg Barclays U.S. 5-10 Year Corporate Bond Index. State Street SPDR Portfolio Intermediate Term Corporate Bond ETF has $10.79 billion in assets, Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares has $65.4 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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
FlexShares Credit-Scored US Corporate Bond ETF (SKOR): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
