FlexShares ESG & Climate Developed Markets ex-US Core Index Fund

FlexShares ESG & Climate Developed Markets ex-US Core Index Fund (FEDM) is a Northern Trust ETF holding about 220 large and mid-sized companies in developed countries outside the US. It screens out businesses such as tobacco and thermal coal and tilts toward lower carbon emissions while staying close to the broad market. It charges 0.12% a year, below the 0.18% ESG peer average, but held just $79 million as of July 31, 2026.

• Over the year to Oct 27, 2026, FEDM returned +13.8%, 2nd of 5 among similar funds.
• Its 5-year annualized return was +7.7%.
• Its worst full calendar year was 2022 (-15.2%); its best was 2025 (+26.9%).
• The deepest fall in its price history was 29.4% (Nov 8, 2021 to Sep 27, 2022), recovered by Mar 6, 2024.

As of Jul 31, 2026, the fund held 220 securities; the ten largest made up 16.73% of assets.

• Over the three months to Jul 31, 2026, investors withdrew a net $3.1M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +2.16%, +0.20%, +3.69%.

FEDM tracks the Northern Trust ESG & Climate Developed Markets ex-US Core Index. Northern Trust Investments (NTI) builds the index and also manages the fund. The starting pool is the Northern Trust Developed Markets ex-US Large Cap Index. It holds large and mid-sized companies in 22 developed countries outside the US, including Japan, the UK and Canada. The index first removes companies tied to tobacco, certain weapons, thermal coal, unconventional oil and gas, and for-profit prisons. It also drops companies linked to violations of international norms. Some of these cuts are outright bans. Others apply only above a set share of revenue.

Next, an optimizer (a computer model) sets the weights. It tries to keep the portfolio behaving like the starting pool while raising its overall ESG Vector Score. That score is a Northern Trust rating based on SASB sustainability standards. The optimizer also lowers carbon intensity and the potential emissions from fossil fuel reserves. Limits on countries, sectors and turnover keep the index close to the broad market. Because the targets apply to the whole portfolio, single holdings can still score poorly. Shell was the fourth-largest position as of July 31, 2026.

The index is reconstituted quarterly. It had 219 stocks as of December 31, 2025. The fund uses representative sampling, which means it may hold a sample that mirrors the index instead of every stock. It must keep at least 80% of its assets in index stocks or depositary receipts.

• FEDM charges 0.12% a year, versus an average of 0.18% for the similar funds below (2nd of 5, cheapest first).
• The fee includes a 0.04% waiver from the adviser, which may end.
• Using the prospectus's standard example, $10,000 invested would cost about $12 in the first year and $201 over 10 years (assuming a 5% annual return).

It adds developed-market stocks from outside the US, which can broaden a portfolio built mostly on US companies.

FEDM spreads money across non-US developed markets. As of July 31, 2026, Japan made up 21% of the fund, the UK 14% and Canada 11%. The fund launched in September 2021, so it has no record from the 2008 or 2020 crashes. Its deepest drop was 29.4%, from November 2021 to September 2022, and it took about 17 months to recover, in March 2024. Its worst calendar year was 2022, when it lost 15.59%. Anyone forced to sell shares in late 2022 would have locked in those losses. The trailing 12-month yield was 2.87% as of October 27, 2026, paid quarterly. The expense ratio is 0.12%. The fund is small, with about $79 million in assets, which is worth keeping an eye on. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by holdings overlap from the latest N-PORT reports.