Understanding the FlexShares Real Assets Allocation Index Fund (ASET)

The FlexShares Real Assets Allocation Index Fund (ticker: ASET) is an ETF designed to invest in real assets. Based on its top holdings, the fund focuses on global infrastructure, quality real estate, and natural resources.

What this ETF is trying to do

This fund seeks to provide exposure to different types of "real assets." Instead of just focusing on traditional stocks or bonds, it spreads its investments across sectors like infrastructure and real estate. According to the most recent data, the fund holds three main assets:

• FLEXSHARES STOXX Global Broad Infrastructures ETF (NFRA): 50.06%

• FLEXSHARES Global Quality Real Estate ETF (GQRE): 39.00%

• FLEXSHARES MStar Global Upstream Natural Resources ETF (GUNR): 10.82%

What the numbers show

When looking at how ASET has performed, it is important to distinguish between price return (the change in the share price) and total return (which includes distributions).

• One-Year Performance: The one-year price return was approximately 2.99%. When including distributions, the one-year total return was approximately 3.04%.

• Three-Year Performance: The three-year price return was approximately 22.03%. The three-year total return was higher, at approximately 30.24%.

• Five-Year Performance: The five-year total return was approximately 17.90%.

To give you an idea of the price movement, the current price is $34.27. An estimated price from roughly one year ago was approximately $33.27.

Income and distribution explanation

ASET provides some level of income through distributions. The current distribution yield is approximately 4.79%. However, the frequency of these payments is described as "irregular" or "less frequent," with only one payout recorded in the last 12 months.

It is important to remember that a distribution yield tells you how much cash was paid out relative to the price, but it is not the same as your total return.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the assets held by the fund). The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

However, we can look at the erosion-risk score, which is 94. This is labeled as "Stable / sideways" with a "good" severity rating. There is no severe erosion-risk flag for this ETF.

Pros

• Stronger Total Returns: Over three years, the total return (30.24%) was higher than the price return (22.03%), showing that distributions added value to the investment.

• Stable Risk Profile: The erosion-risk score suggests the fund has a stable price trend.

Cons

• Irregular Income: The distribution frequency is irregular, meaning you cannot rely on a steady monthly or quarterly schedule for cash flow.

• Limited Holdings: The fund is concentrated in only three main holdings.

Beginner takeaway

ASET focuses on real-world assets like infrastructure and real estate. While it offers a distribution yield of about 4.79%, these payments do not happen on a regular, frequent schedule. Historically, the fund's total return has been higher than its share-price return, meaning distributions have added to the overall value.