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 market equities while emphasizing factors like value, momentum, and quality.

Reputation and Reliability

Northern Trust, the issuer, is a well-established financial institution with a solid reputation for providing investment management and trust services.

Management Expertise

Northern Trust has extensive experience in managing ETFs and passively managed funds, demonstrating a deep understanding of index replication and factor-based investing.

Goal

The fund aims to provide investment results that correspond generally to the price and yield performance of the Morningstar Emerging Markets Factor Tilt Index.

Investment Approach and Strategy

Strategy: The ETF tracks a specific index, the Morningstar Emerging Markets Factor Tilt Index, employing a passive investment strategy with a tilt towards factors like value, momentum, and quality.

Composition The ETF primarily holds stocks of companies located in emerging markets, selected and weighted based on a proprietary factor-tilted methodology.

Market Share: TLEH has a relatively small market share compared to larger, more established emerging markets ETFs.

Total Net Assets (AUM): 118000000

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 players dominating the market share. TLEH differentiates itself through its factor-tilted approach, which may provide enhanced returns compared to traditional market-cap weighted indexes. However, its smaller size and lower liquidity can be a disadvantage compared to larger, more liquid competitors like VWO and IEMG.

Historical Performance: Historical performance data is crucial in assessing the ETF's risk-adjusted returns. (Historical performance should be gathered from reliable financial data providers).

Benchmark Comparison: Comparing TLEH's performance to the Morningstar Emerging Markets Factor Tilt Index reveals its tracking efficiency and potential outperformance due to factor tilts.

Expense Ratio: 0.42

Average Trading Volume

The ETF's average trading volume is moderate, indicating reasonable liquidity for most investors.

Bid-Ask Spread

The bid-ask spread can vary depending on market conditions, but generally, is manageable.

Market Environment Factors

Economic growth in emerging markets, global trade policies, currency fluctuations, and commodity prices significantly impact TLEH's performance.

Growth Trajectory

TLEH's growth is dependent on the increasing adoption of factor-based investing and the overall performance of emerging markets. Changes in the underlying index methodology or holdings can also affect its growth trajectory.

Competitive Edge

TLEH's factor-tilted approach is its primary competitive advantage, potentially offering enhanced risk-adjusted returns compared to market-cap weighted emerging market ETFs. The emphasis on value, momentum, and quality factors seeks to identify undervalued and high-performing companies with strong fundamentals. This differentiated strategy may appeal to investors seeking specific factor exposures within their emerging market allocations. Furthermore, the fund's association with Northern Trust provides investors with confidence in its management and operational integrity.

Volatility

TLEH's volatility is influenced by the volatility of emerging market equities and the specific factor exposures it targets.

Market Risk

TLEH is exposed to typical emerging market risks, including political instability, currency risk, and economic downturns. The fund's factor tilts may also introduce additional risks depending on the performance of the targeted factors.

Ideal Investor Profile

The ideal investor is one seeking exposure to emerging markets with a preference for factor-based investing. This investor should have a long-term investment horizon and a tolerance for the higher volatility associated with emerging market equities.

Market Risk

TLEH is suitable for long-term investors seeking to diversify their portfolios with emerging market exposure and implement a factor-based investment strategy.

The FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (TLEH) provides exposure to emerging market equities with a factor-tilted approach, focusing on value, momentum, and quality. Managed by Northern Trust, it seeks to track the Morningstar Emerging Markets Factor Tilt Index, offering potentially enhanced risk-adjusted returns compared to traditional market-cap weighted ETFs. While its AUM and liquidity are relatively lower than major competitors, its differentiated strategy may appeal to investors seeking specific factor exposures. Investors should be aware of the inherent risks associated with emerging markets and factor-based investing before considering an investment in TLEH.

Data Sources:

• Morningstar
• ETF.com
• Northern Trust

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Investment decisions should be made based on your own research and consultation with a financial advisor. Market data can change rapidly.