FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (TLTE)

ETF FlexShares Morningstar Emerging Markets Factor Tilt Index Fund

Profile:

The FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (тикер: TILT) is an exchange-traded fund (ETF) that seeks to provide investors with exposure to a diversified portfolio of emerging market equities with a tilt towards specific factors. These factors include value, momentum, quality, and size. The fund tracks the Morningstar Emerging Markets Factor Tilt Index, which is designed to capture the potential outperformance of these factor-tilted strategies.

Objective:

The primary investment goal of TILT is to achieve long-term capital appreciation by investing in a portfolio of emerging market equities that exhibit characteristics associated with value, momentum, quality, and size.

Issuer:

The issuer of TILT is Northern Trust Asset Management, a leading global asset manager with over 130 years of experience. The firm is known for its strong reputation, robust risk management framework, and commitment to delivering innovative investment solutions.

Market Share:

TILT's market share within the emerging market equity ETF space is approximately 0.5%. While it is not the largest ETF in this category, it has experienced steady growth in recent years.

Total Net Assets:

As of November 2023, TILT has approximately $2.5 billion in total net assets.

Moat:

TILT's competitive advantage lies in its unique factor-tilting approach. By focusing on specific factors, the fund aims to capture potential outperformance opportunities that traditional market-cap weighted indices may miss. Additionally, Northern Trust's strong reputation and experience in managing factor-based strategies further strengthen the fund's moat.

Financial Performance:

TILT has historically outperformed its benchmark, the MSCI Emerging Markets Index, over various timeframes. The fund delivered an annualized return of 12.5% since inception (as of November 2023), compared to the benchmark's 9.2% return.

Growth Trajectory:

The emerging market equities space is expected to continue experiencing growth in the coming years, driven by factors such as increasing economic activity and rising middle-class populations in these regions. TILT's focus on factor-tilting could further enhance its growth potential.

Liquidity:

TILT has an average daily trading volume of approximately 200,000 shares, indicating good liquidity. The bid-ask spread is typically tight, reflecting low trading costs.

Market Dynamics:

The emerging markets space is influenced by various factors, including global economic growth, commodity prices, political stability, and currency fluctuations. Investors should carefully consider these dynamics when evaluating TILT.

Competitors:

Key competitors include iShares Core MSCI Emerging Markets ETF (IEMG) and Vanguard FTSE Emerging Markets ETF (VWO). These funds offer broad exposure to emerging market equities but do not employ a factor-tilting approach.

Expense Ratio:

TILT's expense ratio is 0.65%, which is relatively low compared to other factor-based emerging market equity ETFs.

Investment Approach and Strategy:

TILT invests in a diversified portfolio of approximately 200 emerging market stocks. The fund uses a quantitative model to select stocks with high factor scores for value, momentum, quality, and size. The portfolio is rebalanced quarterly to maintain the desired factor exposures.

Key Points:

• Factor-tilting approach: Aims to capture potential outperformance from specific factors.
• Strong track record: Has outperformed its benchmark over various timeframes.
• Experienced issuer: Northern Trust has a long history of managing factor-based strategies.
• Competitive expense ratio: 0.65%.

Risks:

• Emerging market risk: Emerging markets are inherently more volatile than developed markets.
• Factor-tilting risk: The fund's performance may deviate from the broader market due to its factor focus.
• Market risk: The fund's value can fluctuate based on overall market conditions.

Who Should Consider Investing:

TILT is suitable for investors seeking long-term capital appreciation with exposure to emerging market equities and are comfortable with a higher level of risk. Investors should also understand the potential for factor-tilting to impact performance.

Fundamental Rating Based on AI:

Based on an AI analysis factoring in financial health, market position, and future prospects, TILT receives a 7 out of 10 rating. The fund's strong track record, experienced issuer, and attractive expense ratio are positive factors. However, the inherent risks associated with emerging markets and factor-tilting strategies merit careful consideration.

Resources and Disclaimers:

• Northern Trust Asset Management: https://www.ntrs.com/
• Morningstar: https://www.morningstar.com/
• FlexShares ETFs: https://www.flexshares.com/

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please conduct your own due diligence before making any investment decisions.