FlexShares Emerging Markets Quality Low Volatility Index Fund

FlexShares Emerging Markets Quality Low Volatility Index Fund (QLVE), an ETF, tracks a Northern Trust index of large and mid-sized emerging-market companies. The index drops the weakest fifth on profitability, cash flow and management efficiency, then picks and weights stocks to aim for smaller price swings. Its 0.18% yearly fee is below the 0.26% average of similar funds, but the fund is tiny, with $16.8 million in assets as of July 31, 2026.

• Over the year to Oct 27, 2026, QLVE returned +12.2%, 3rd of 5 among similar funds.
• Its worst full calendar year was 2023 (+8.5%); its best was 2025 (+21.9%).
• The deepest fall in its price history was 13.3% (Sep 26, 2024 to Apr 8, 2025), recovered by Jun 9, 2025.

As of Jul 31, 2026, the fund held 139 securities; the ten largest made up 37.89% of assets.

• Over the three months to Jul 31, 2026, investors added a net $0.00 (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +7.18%, -1.48%, +0.63%.

QLVE tracks the Northern Trust Emerging Markets Quality Low Volatility Index. Northern Trust both designs the index and manages the fund. The starting pool is large and mid-sized companies based in emerging markets. Each is ranked on a proprietary quality score built from profitability, cash flow and management efficiency, and the lowest-scoring fifth is dropped.

An optimizer, a mathematical model, then picks and weights stocks from the rest to lower overall volatility (how sharply prices swing) while raising the quality score. Limits on sector, country, single-stock size, beta (sensitivity to market moves), liquidity and turnover keep it close to the starting pool. As of December 31, 2025, the index held 155 stocks with market values from $3.7 billion to $1.2 trillion. It is rebuilt quarterly; the prospectus reports 48% portfolio turnover, meaning about half the holdings changed in a year.

The fund uses representative sampling: it holds a subset of index stocks that together resemble the whole. It had 139 holdings as of July 31, 2026. At least 80% of assets go to index stocks or depositary receipts (certificates representing foreign shares); up to 20% can be cash, futures or currency contracts. It does not try to beat the index or retreat to cash when markets fall. It may lend out securities worth up to one-third of its assets.

• QLVE charges 0.18% a year, versus an average of 0.26% for the similar funds below (2nd of 5, cheapest first).
• 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 $18 in the first year and $242 over 10 years (assuming a 5% annual return).

It adds large and mid-sized companies from Taiwan, South Korea, India and other emerging markets that a US-focused portfolio may lack, with a tilt toward profitable, steadier firms.

QLVE did not exist during the 2008 crisis. It fell 21.67% in the first quarter of 2020 as COVID hit, and lost 12.93% in 2022, its worst full calendar year. Since October 2022, its deepest drop was 13.3%, from September 26, 2024 to April 8, 2025; it regained that peak by June 9, 2025, about two months later. Drawing cash from it during a slump would mean cashing out shares at low prices.

It can also lag in strong markets: in 2025 it gained 21.72%, against 33.57% for the MSCI Emerging Markets Index. It paid $1.02 a share over the year to October 27, 2026, a 3.12% yield, in quarterly payments. Its 0.18% fee costs $18 in year one and $242 over ten years on $10,000, in the SEC's standard example. Past results don't predict the future, and a plan should weigh the whole portfolio, not one fund.

Matched by closest holdings overlap from the latest N-PORT reports (no similar fund shares 20% or more of its holdings).