The FlexShares Morningstar Emerging Markets Factor Tilt ETF (
TLTE Quick Quote TLTE - Free Report) was launched on 09/25/2012, and is a smart beta exchange traded fund designed to offer broad exposure to the Broad Emerging Market ETFs 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
TLTE is managed by Flexshares, and this fund has amassed over $247.83 million, which makes it one of the average sized ETFs in the Broad Emerging Market ETFs. Before fees and expenses, TLTE seeks to match the performance of the Morningstar Emerging Markets Factor Tilt Index.
The Morningstar Emerging Markets Factor Tilt Index reflects the performance of a selection of equity securities designed to provide broad exposure to the global emerging equities markets, with increased exposure to small-capitalization stocks and value stocks.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.59% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 4.33%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Taking into account individual holdings, Samsung Electronics Co Ltd Common Stock Krw 100 (A005930) accounts for about 3.27% of the fund's total assets, followed by Taiwan Semiconductor Manufacturing Co Ltd Common and Tencent Holdings Ltd Common Stock Hkd 0.00002 (0700.HK).
The top 10 holdings account for about 14.15% of total assets under management.
Performance and Risk
The ETF has lost about -18.85% and is down about -20.18% so far this year and in the past one year (as of 07/21/2022), respectively. TLTE has traded between $46.56 and $63.75 during this last 52-week period.
The fund has a beta of 0.83 and standard deviation of 22.66% for the trailing three-year period, which makes TLTE a medium risk choice in this particular space. With about 2688 holdings, it effectively diversifies company-specific risk.
FlexShares Morningstar Emerging Markets Factor Tilt ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core MSCI Emerging Markets ETF (
IEMG Quick Quote IEMG - Free Report) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF ( VWO Quick Quote VWO - Free Report) tracks FTSE Emerging Markets All Cap China A Inclusion Index. IShares Core MSCI Emerging Markets ETF has $64.47 billion in assets, Vanguard FTSE Emerging Markets ETF has $69.75 billion. IEMG has an expense ratio of 0.09% and VWO charges 0.08%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market ETFs.
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
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