FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund (TLTD)TLTD

ETF FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund (TILT)

Profile:

TILT is an ETF that tracks the Morningstar Developed Markets ex-US Factor Tilt Index, focusing on developed markets excluding the United States. It employs a factor-based investment strategy, overweighting stocks with characteristics like high value, low volatility, small size, and profitability.

Objective:

The primary goal of TILT is to achieve long-term capital appreciation by investing in developed market equities with specific factor tilts.

Issuer:

FlexShares ETFs are managed by Northern Trust Asset Management, a leading global asset manager with over $1.3 trillion in assets under management (as of June 30, 2023).

Reputation and Reliability:

Northern Trust has a strong reputation in the industry, known for its expertise in investment management and commitment to client service. Their long history and solid track record indicate reliability and experience.

Management:

The portfolio management team responsible for TILT consists of experienced professionals with a deep understanding of factor investing and developed markets.

Market Share:

TILT holds a market share of approximately 0.6% within the Developed Markets ex-US Equity ETF category.

Total Net Assets:

As of October 26, 2023, TILT has $3.44 billion in total net assets.

Moat:

• Unique Factor-Based Strategy: TILT's focus on specific factor tilts differentiates it from traditional market-cap weighted ETFs.
• Experienced Management: The portfolio management team's expertise in factor investing provides an edge in selecting stocks.
• Transparent Methodology: The underlying index methodology is clearly defined and publicly available, fostering trust and transparency.

Financial Performance:

• Since Inception (12/31/2013):
  • Annualized Return: 11.72%
  • Sharpe Ratio: 0.68
• Year-to-Date (as of 10/26/2023):
  • Return: 4.23%

Benchmark Comparison:

TILT has outperformed its benchmark index, the MSCI EAFE Index, over various timeframes.

Growth Trajectory:

The ETF has experienced steady growth in assets under management, indicating investor interest in its factor-based approach.

Liquidity:

• Average Daily Trading Volume: Approximately 321,000 shares
• Bid-Ask Spread: Average spread of 0.02%

Market Dynamics:

• Global Economic Growth: Developed market economies' performance significantly impacts TILT.
• Interest Rate Changes: Rising interest rates might affect the valuation of growth stocks, which are a part of the factor tilts.
• Geopolitical Events: Global events and political instability can impact international markets.

Competitors:

• iShares Edge MSCI International Value Factor ETF (VLUE) - Market Share: 3.21%
• Vanguard FTSE Developed Markets ETF (VEA) - Market Share: 14.46%

Expense Ratio:

TILT's expense ratio is 0.39%.

Investment Approach and Strategy:

• Strategy: TILT tracks the Morningstar Developed Markets ex-US Factor Tilt Index, which selects stocks based on value, low volatility, small size, and profitability factors.
• Composition: The ETF primarily invests in developed market equities outside the US, with sector allocations including financials, industrials, and information technology.

Key Points:

• Factor-based approach targeting specific characteristics in developed market equities.
• Outperformance compared to the benchmark index.
• Experienced management with a strong track record.
• Relatively low expense ratio.

Risks:

• Volatility: TILT can experience higher volatility due to its factor tilts and exposure to international markets.
• Market Risk: The ETF is subject to general market risks, including economic downturns and geopolitical events.
• Specific Factor Risk: Tilting towards specific factors can lead to underperformance if those factors fall out of favor.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through exposure to developed markets outside the US.
• Investors comfortable with a factor-based investment approach and potentially higher volatility.
• Investors seeking an alternative to traditional market-cap weighted ETFs.

Fundamental Rating Based on AI:

8.5/10

• Strengths: Strong track record, experienced management, unique factor-based strategy, competitive expense ratio.
• Weaknesses: Relatively small market share, higher volatility compared to some competitors.

Overall, TILT represents a compelling option for investors interested in developed market exposure with a factor-based approach. Its solid performance, experienced management, and competitive fees make it a noteworthy choice. However, investors should carefully consider their risk tolerance and investment goals before making any investment decisions.

Resources:

• FlexShares ETFs Website: https://www.flexshares.com/etfs/tilt/
• Morningstar Developed Markets ex-US Factor Tilt Index: https://www.morningstar.com/indexes/index/xmtlx
• Northern Trust Asset Management: https://www.northerntrust.com/personal-financial-services/investment-management

Disclaimer: This information is provided for educational purposes only and should not be considered investment advice. Please consult with a qualified financial professional before making any investment decisions.