FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (TLTE)

Overview

The FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (TLEH) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar Emerging Markets Factor Tilt Index. It focuses on providing exposure to emerging markets equities, tilting towards factors like value, momentum, and quality.

Reputation and Reliability

FlexShares is a suite of ETFs managed by Northern Trust, a well-established financial institution known for its expertise in asset management and index construction. Northern Trust has a solid reputation for delivering innovative and factor-based investment solutions.

Management Expertise

The management team at Northern Trust has extensive experience in managing ETFs and developing factor-based investment strategies. They leverage their expertise in quantitative analysis and portfolio construction to implement the fund's investment strategy effectively.

Goal

The primary investment goal of TLEH is to track the performance of the Morningstar Emerging Markets Factor Tilt Index, providing investors with exposure to a diversified portfolio of emerging market equities with a tilt towards value, momentum, and quality factors.

Investment Approach and Strategy

Strategy: TLEH aims to track the Morningstar Emerging Markets Factor Tilt Index, which employs a quantitative methodology to select and weight securities based on factor scores.

Composition TLEH primarily holds stocks of companies located in emerging market countries. It is diversified across sectors and individual holdings, with the largest allocations typically in financials, information technology, and consumer discretionary.

Market Share: TLEH's market share within the emerging markets factor-based ETF segment is relatively small compared to larger, more established ETFs.

Total Net Assets (AUM): 149697094

Key Competitors

• Vanguard FTSE Emerging Markets ETF (VWO)
• iShares Core MSCI Emerging Markets ETF (IEMG)
• Schwab Emerging Markets Equity ETF (SCHE)

Competitive Landscape

The emerging markets ETF space is highly competitive, with several large ETFs dominating the market share. TLEH differentiates itself through its factor-tilted approach, which may appeal to investors seeking enhanced returns through strategic factor exposure. However, its smaller AUM and relatively shorter track record can be disadvantages compared to its larger, more liquid competitors.

Historical Performance: The fund's historical performance depends on the time frame analyzed and the overall performance of emerging markets, relative to its factor tilts.

Benchmark Comparison: TLEH's performance should be compared to the Morningstar Emerging Markets Factor Tilt Index to gauge its tracking effectiveness. Performance relative to broad market emerging market ETFs like VWO and IEMG will reflect the success of its factor tilts.

Expense Ratio: 0.43

Average Trading Volume

TLEH's average trading volume is moderate, which may impact trading costs and the ability to execute large orders efficiently.

Bid-Ask Spread

TLEH's bid-ask spread is generally wider than larger, more liquid emerging market ETFs, reflecting its lower trading volume.

Market Environment Factors

Economic growth in emerging markets, global trade conditions, currency fluctuations, and geopolitical risks all influence TLEH's performance.

Growth Trajectory

TLEH's growth trajectory is dependent on investor demand for factor-based emerging market exposure and the fund's ability to deliver competitive performance relative to its benchmark and peers. Changes to strategy and holdings would be dependent on index rebalancing and factor analysis.

Competitive Edge

TLEH's competitive advantage lies in its factor-tilted approach, which aims to enhance returns by strategically overweighting stocks with favorable value, momentum, and quality characteristics. This differentiated investment strategy may appeal to investors seeking more targeted exposure to emerging markets. Northern Trust's expertise in factor-based investing adds credibility to the fund. However, the factor approach can also lead to periods of underperformance relative to the broad market.

Volatility

TLEH's volatility is expected to be similar to or slightly higher than broad emerging market ETFs due to its factor tilts and concentrated holdings.

Market Risk

TLEH is subject to emerging market risk, including political instability, currency fluctuations, and economic downturns. Specific risks associated with its underlying assets include company-specific risks and sector concentration risks.

Ideal Investor Profile

The ideal investor for TLEH is one seeking exposure to emerging market equities with a factor-based approach. This ETF may appeal to investors who believe that value, momentum, and quality factors can enhance returns in emerging markets.

Market Risk

TLEH is best suited for long-term investors with a moderate to high risk tolerance who are seeking to diversify their portfolios with emerging market equities and a factor tilt.

The FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (TLEH) offers exposure to emerging markets equities with a tilt towards value, momentum, and quality factors. Managed by Northern Trust, the fund aims to track the Morningstar Emerging Markets Factor Tilt Index. TLEH's factor-tilted approach differentiates it from broad market emerging market ETFs, potentially enhancing returns but also increasing volatility. It is suitable for long-term investors seeking targeted exposure to emerging markets with a factor focus, but its smaller AUM and moderate liquidity should be considered.

Data Sources:

• FlexShares Website
• Morningstar
• ETF.com

Disclaimers:

The information provided is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. Investors should consult with a financial advisor before making any investment decisions. Market share data may be approximate and based on available public information.