FlexShares Quality Dividend Index Fund

FlexShares Quality Dividend Index Fund (QDF) is a Northern Trust ETF that tracks the Northern Trust Quality Dividend Index. The index holds about 120 US large- and mid-cap stocks that pay dividends, pass a financial-quality screen and are weighted to move roughly in line with the broader market. Its yield was a modest 1.51% as of October 27, 2026. Its 0.39% expense ratio is above the 0.26% average of similar funds.

• Over the year to Oct 27, 2026, QDF returned +14.3%, 5th of 9 among similar funds.
• Its 5-year annualized return was +11.7% and its 10-year +12.2%.
• In the 2020 COVID crash it fell 36.1% and regained its old high 7.8 months after the low.
• Its worst full calendar year was 2022 (-12.1%); its best was 2013 (+36.3%).
• The deepest fall in its price history was 36.6% (Feb 12, 2020 to Mar 23, 2020), recovered by Dec 1, 2020.

As of Jul 31, 2026, the fund held 130 securities; the ten largest made up 39.44% of assets.

By sector

• Over the three months to Jul 31, 2026, investors withdrew a net $28.9M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +3.86%, +1.37%, +0.79%.

QDF aims to match the Northern Trust Quality Dividend Index, before fees. Northern Trust Investments (NTI) builds the index and also manages the fund. The index starts with the Northern Trust 1250 Index, which weights US large and mid-size companies by market value. It then drops stocks that pay no dividend and stocks in the bottom fifth on a quality score. That score ranks companies on three things: management efficiency (such as how they handle financing), profitability (how reliable their earnings are) and cash flow.

Next, a computer model called an optimizer picks and weights the remaining stocks. It has three goals: raise the quality score, beat the parent index's dividend yield, and keep beta close to the parent index's. Beta measures how much a portfolio moves with the market. Limits on sector, industry and single-stock weights stop the index from drifting too far. The index had 120 stocks as of December 31, 2025, and it is rebuilt every quarter. The largest companies still dominate: as of July 31, 2026, Apple was 8.7% of the fund and NVIDIA 6.3%.

The fund uses representative sampling. That means it may hold a group of stocks that resembles the index rather than every single one. It must keep at least 80% of its assets in index stocks. The rest can go into cash, money market funds or stock-index futures. It can also lend out up to one-third of its assets.

• QDF charges 0.39% a year, versus an average of 0.26% for the similar funds below (8th of 9, cheapest first).
• Of that, 0.37% is the management fee; the rest covers other fund expenses.
• The fee includes a 0.01% waiver from the adviser, which may end.
• Using the prospectus's standard example, $10,000 invested would cost about $40 in the first year and $504 over 10 years (assuming a 5% annual return).

QDF owns about 130 US large- and mid-cap stocks and is built to swing about as much as the market, so it works more as a stock holding with a quality tilt than as an income fund.

QDF gives broad exposure to profitable US dividend payers, but it is not a low-risk fund. In the 2020 COVID crash it fell 36.1% from February 19 to March 23, 2020. It got back to its old peak by November 2020, about eight months later. In the 2022 bear market it fell 22.1% and needed 9.6 months to recover, finally doing so in July 2023. Its worst calendar year was 2022, when it lost 12.1%. The fund launched in 2012, so it has no 2008 record. Anyone who needs to withdraw money in a bad year could be cashing out near lows like these. Income is modest: the trailing yield was 1.51% as of October 27, 2026, paid quarterly. The SEC's standard example puts costs at $504 over 10 years on $10,000. Past results don't predict future returns, and a plan should look at the whole portfolio, not one fund.

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