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 emerging markets equities, employing a factor-tilted approach that weights companies based on value, momentum, and quality factors.

Reputation and Reliability

FlexShares is a recognized ETF provider with a focus on innovative and specialized investment solutions. They are known for their factor-based ETFs and commitment to research-driven investment strategies.

Management Expertise

The fund is managed by a team with expertise in factor investing and emerging markets equities. Their experience ensures effective portfolio construction and management in line with the fund's objectives.

Goal

The primary investment goal of TLEH is to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar Emerging Markets Factor Tilt Index.

Investment Approach and Strategy

Strategy: TLEH aims to track the Morningstar Emerging Markets Factor Tilt Index. The index employs a quantitative methodology that tilts towards stocks with attractive value, momentum, and quality characteristics within the emerging markets universe.

Composition The ETF holds a portfolio of stocks from emerging market countries. Its composition is driven by the index's factor-tilted methodology, resulting in a diversified portfolio with exposure to multiple sectors and countries.

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

Total Net Assets (AUM): 124900000

Key Competitors

• IEMG
• VWO
• EEM
• SCHE

Competitive Landscape

The emerging markets ETF landscape is highly competitive, dominated by large, broad-market ETFs. TLEH's factor-tilt approach offers potential for outperformance, but faces challenges in attracting assets due to higher expense ratios and lower brand recognition compared to its competitors. Larger competitors benefit from economies of scale, leading to lower expense ratios and broader investor appeal.

Historical Performance: Historical performance data should be obtained from reliable financial data sources. Performance varies depending on the period observed.

Benchmark Comparison: The ETF's performance should be compared to the Morningstar Emerging Markets Factor Tilt Index to evaluate its tracking efficiency.

Expense Ratio: 0.55

Average Trading Volume

The average daily trading volume of TLEH is relatively low, which can impact ease of trading and potential price fluctuations.

Bid-Ask Spread

The bid-ask spread can vary but tends to be wider than more liquid ETFs, increasing the cost of trading.

Market Environment Factors

Economic growth in emerging markets, interest rate policies, currency fluctuations, and geopolitical events significantly impact TLEH. Trade relations, commodity prices, and political stability in key emerging market countries also affect the ETF.

Growth Trajectory

TLEH's growth depends on investor demand for factor-based emerging markets exposure. Strategic shifts could include refined factor weightings or expanded geographic coverage.

Competitive Edge

TLEH's competitive advantage lies in its factor-tilted approach, aiming to deliver superior risk-adjusted returns compared to broad-market emerging market ETFs. By focusing on value, momentum, and quality factors, the ETF targets companies with potentially higher growth and profitability. The fund's distinct weighting scheme can provide diversification benefits and potential outperformance during specific market cycles. The methodology attempts to avoid over-concentration in state-owned enterprises, which are common in traditional emerging market indices.

Volatility

TLEH's volatility is comparable to other emerging markets ETFs, which tend to be more volatile than developed market ETFs.

Market Risk

The underlying assets are subject to risks inherent in emerging markets, including political instability, currency fluctuations, regulatory changes, and economic downturns.

Ideal Investor Profile

TLEH is suitable for investors seeking exposure to emerging markets equities with a factor-based approach. It is appropriate for those with a higher risk tolerance and a long-term investment horizon.

Market Risk

TLEH is best suited for long-term investors who are comfortable with emerging markets volatility and believe in the potential for factor-based investing to enhance returns.

The FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (TLEH) offers exposure to emerging market equities through a factor-tilted approach that emphasizes value, momentum, and quality. While it provides a differentiated strategy compared to broad-market ETFs, it faces competition from larger and more liquid funds. Investors should consider its factor-based methodology and higher expense ratio relative to its peers. Given its inherent emerging market risks and lower liquidity, TLEH is suitable for long-term investors with a high risk tolerance and belief in factor-based investing.

Data Sources:

• FlexShares Website
• Morningstar
• ETF.com
• Bloomberg

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Investment decisions should be based on individual circumstances and consultation with a qualified financial advisor. Market share data can vary depending on the source and methodology used.