We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is FlexShares Morningstar U.S. Market Factor Tilt ETF (TILT) a Strong ETF Right Now?
Read MoreHide Full Article
Making its debut on 09/16/2011, smart beta exchange traded fund FlexShares Morningstar U.S. Market Factor Tilt ETF (TILT - Free Report) provides investors broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Flexshares, and has been able to amass over $1.33 billion, which makes it one of the larger ETFs in the Style Box - All Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the Morningstar U.S. Market Factor Tilt Index.
The Morningstar U.S. Market Factor Tilt Index measures the performance of U.S. equity markets with increased exposure toward small-capitalization and value stocks.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for TILT are 0.25%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.56%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
TILT's heaviest allocation is in the Information Technology sector, which is about 22.60% of the portfolio. Its Financials and Consumer Discretionary round out the top three.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 4.67% of the fund's total assets, followed by Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) and Amazon.com Inc Common Stock Usd 0.01 (AMZN - Free Report) .
Its top 10 holdings account for approximately 19.78% of TILT's total assets under management.
Performance and Risk
The ETF has added about 6.85% and is up about 5.61% so far this year and in the past one year (as of 11/01/2023), respectively. TILT has traded between $145.60 and $175.80 during this last 52-week period.
TILT has a beta of 1.09 and standard deviation of 18.31% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 2045 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares Morningstar U.S. Market Factor Tilt ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $42.53 billion in assets, Vanguard Total Stock Market ETF has $296.16 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is FlexShares Morningstar U.S. Market Factor Tilt ETF (TILT) a Strong ETF Right Now?
Making its debut on 09/16/2011, smart beta exchange traded fund FlexShares Morningstar U.S. Market Factor Tilt ETF (TILT - Free Report) provides investors broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Flexshares, and has been able to amass over $1.33 billion, which makes it one of the larger ETFs in the Style Box - All Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the Morningstar U.S. Market Factor Tilt Index.
The Morningstar U.S. Market Factor Tilt Index measures the performance of U.S. equity markets with increased exposure toward small-capitalization and value stocks.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for TILT are 0.25%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.56%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
TILT's heaviest allocation is in the Information Technology sector, which is about 22.60% of the portfolio. Its Financials and Consumer Discretionary round out the top three.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 4.67% of the fund's total assets, followed by Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) and Amazon.com Inc Common Stock Usd 0.01 (AMZN - Free Report) .
Its top 10 holdings account for approximately 19.78% of TILT's total assets under management.
Performance and Risk
The ETF has added about 6.85% and is up about 5.61% so far this year and in the past one year (as of 11/01/2023), respectively. TILT has traded between $145.60 and $175.80 during this last 52-week period.
TILT has a beta of 1.09 and standard deviation of 18.31% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 2045 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares Morningstar U.S. Market Factor Tilt ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $42.53 billion in assets, Vanguard Total Stock Market ETF has $296.16 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.