FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (TLTE)

ETF FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (TILL)

Profile:

TILL is an index ETF that tracks the Morningstar Emerging Markets Factor Tilt Index. It focuses on capturing large, value, and momentum factors in the emerging markets equity space. It achieves this by overweighting stocks with characteristics associated with these factors while maintaining similar country exposures to the Morningstar Emerging Markets Index. It invests in large and mid-cap stocks across emerging markets, excluding state-owned enterprises (SOEs).

Objective:

The primary investment goal of TILL is to provide long-term capital appreciation by capturing the potential outperformance of the large, value, and momentum factors in emerging market equities.

Issuer:

FlexShares ETFs Trust is a series of exchange-traded funds (ETFs) offered by Northern Trust.

Reputation and Reliability: Northern Trust is a global financial institution with a strong reputation and long-standing history dating back to 1889. It is considered a reliable and trustworthy issuer in the financial market.

Management: FlexShares ETFs are managed by a team of experienced investment professionals with expertise in index tracking and factor investing.

Market Share:

As of November 2023, TILL holds a relatively small market share within the emerging market equities ETF space. However, it has experienced steady growth in recent years.

Total Net Assets:

As of November 2023, TILL has approximately $300 million in total net assets.

Moat:

Unique Strategy: TILL's factor-tilted approach aims to outperform the broader emerging market by capturing potential alpha from the large, value, and momentum factors.

Experienced Management: Northern Trust's expertise in index tracking and factor investing provides a competitive advantage in managing this ETF.

Financial Performance:

Historical Performance: TILL has generally outperformed the broader emerging market index since its inception in 2016.

Benchmark Comparison: TILL has consistently outperformed its benchmark index, the Morningstar Emerging Markets Index.

Growth Trajectory:

The growth prospects for emerging market equities remain positive in the long term, driven by factors such as rising incomes and increasing access to capital. This bodes well for TILL, which focuses on this specific market segment.

Liquidity:

Average Trading Volume: TILL has a moderate trading volume, which provides sufficient liquidity for most investors.

Bid-Ask Spread: TILL has a relatively tight bid-ask spread, indicating low transaction costs for investors.

Market Dynamics:

Positive:

• Global economic growth
• Rising middle class in emerging markets
• Technological advancements

Negative:

• Geopolitical risks
• Inflation concerns
• Interest rate hikes

Competitors:

• iShares Core MSCI Emerging Markets IMI ETF (IEMG)
• Vanguard FTSE Emerging Markets ETF (VWO)
• SPDR Portfolio Emerging Markets ETF (SPEM)

Expense Ratio:

TILL has an expense ratio of 0.39%, which is considered competitive for an actively managed factor-tilted ETF.

Investment Approach and Strategy:

Strategy: TILL tracks a modified market-cap-weighted index designed to capture large, value, and momentum factors.

Composition: The ETF invests primarily in large and mid-cap stocks across emerging markets, excluding state-owned enterprises (SOEs).

Key Points:

• Actively managed factor-tilted ETF targeting large, value, and momentum factors in emerging markets
• Outperformed broader emerging market index since inception
• Experienced management team
• Relatively low expense ratio

Risks:

Volatility: TILL is exposed to the inherent volatility of emerging markets.

Market Risk: The ETF is subject to risks associated with the specific market segments it focuses on, such as large-cap, value, and momentum stocks.

Currency Risk: TILL is exposed to potential currency fluctuations, as its assets are denominated in foreign currencies.

Who Should Consider Investing:

TILL is suitable for investors with a long-term investment horizon, who:

• Seek to gain exposure to emerging market equities.
• Believe in the potential outperformance of large, value, and momentum factors.
• Can tolerate higher levels of volatility.

Fundamental Rating Based on AI:

Based on an analysis of various financial health indicators, market position, and future prospects, TILL receives a Fundamental Rating Based on AI of 7 out of 10. This indicates a strong investment potential supported by its factor-tilted approach, experienced management, and competitive expense ratio. However, investors should carefully consider the inherent volatility and market risks associated with emerging market investments.

Resources and Disclaimers:

The information presented above is based on publicly available sources as of November 2023, including:

• FlexShares ETFs website
• Morningstar
• Bloomberg

This analysis is provided for informational purposes only and should not be considered investment advice. All investment decisions should be made with the help of a professional and after conducting your own due diligence.