The FlexShares Credit-Scored US Corporate Bond ETF (SKOR) was launched on 11/12/2014, and is a smart beta exchange traded fund designed to offer 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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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 $539.4 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 seeks to match the performance of the Northern Trust Credit-Scored US Corporate Bond Index before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for SKOR are 0.15%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 4.85%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Cashaccounts for about 0.5% of the fund's total assets, followed by Mtb 5.179 07/08/31 (MTB) and Bank Of America Corp Callable Notes Variable-3.42%-12-20-2028 (BAC).
SKOR's top 10 holdings account for about 3.23% of its total assets under management.
Performance and Risk
Year-to-date, the FlexShares Credit-Scored US Corporate Bond ETF has added about 4.34% so far, and was up about 8.38% over the last 12 months (as of 07/02/2025). SKOR has traded between $47.30 and $49.21 in this past 52-week period.
The fund has a beta of 0.21 and standard deviation of 4.79% for the trailing three-year period, which makes SKOR a high risk choice in this particular space. With about 1658 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 $10.11 billion in assets, Vanguard Intermediate-Term Corporate Bond ETF has $53.76 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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