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Is FlexShares Morningstar U.S. Market Factor Tilt ETF (TILT) a Strong ETF Right Now?
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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?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Flexshares, and has been able to amass over $1.62 billion, which makes it one of the larger ETFs in the Style Box - All Cap Blend. This particular fund, before fees and expenses, 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.25%.
It's 12-month trailing dividend yield comes in at 1.24%.
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 22.30% of the portfolio. Its Financials and Healthcare round out the top three.
Looking at individual holdings, Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) accounts for about 3.89% of total assets, followed by Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) and Amazon.com Inc Common Stock Usd 0.01 (AMZN - Free Report) .
The top 10 holdings account for about 15.35% of total assets under management.
Performance and Risk
The ETF has lost about -5.92% so far this year and is up about 9.89% in the last one year (as of 03/22/2022). In the past 52-week period, it has traded between $154.98 and $184.34.
TILT has a beta of 1.10 and standard deviation of 24.03% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 2260 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares Morningstar U.S. Market Factor Tilt ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
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 $44.04 billion in assets, Vanguard Total Stock Market ETF has $283.74 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.
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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?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Flexshares, and has been able to amass over $1.62 billion, which makes it one of the larger ETFs in the Style Box - All Cap Blend. This particular fund, before fees and expenses, 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.25%.
It's 12-month trailing dividend yield comes in at 1.24%.
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 22.30% of the portfolio. Its Financials and Healthcare round out the top three.
Looking at individual holdings, Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) accounts for about 3.89% of total assets, followed by Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) and Amazon.com Inc Common Stock Usd 0.01 (AMZN - Free Report) .
The top 10 holdings account for about 15.35% of total assets under management.
Performance and Risk
The ETF has lost about -5.92% so far this year and is up about 9.89% in the last one year (as of 03/22/2022). In the past 52-week period, it has traded between $154.98 and $184.34.
TILT has a beta of 1.10 and standard deviation of 24.03% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 2260 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares Morningstar U.S. Market Factor Tilt ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
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 $44.04 billion in assets, Vanguard Total Stock Market ETF has $283.74 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.