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Is FlexShares Morningstar U.S. Market Factor Tilt ETF (TILT) a Strong ETF Right Now?
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A smart beta exchange traded fund, the FlexShares Morningstar U.S. Market Factor Tilt ETF (TILT - Free Report) debuted on 09/16/2011, and offers broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $1.46 billion, this makes it one of the larger ETFs in the Style Box - All Cap Blend. TILT is managed by Flexshares. Before fees and expenses, TILT 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.
Operating expenses on an annual basis are 0.25% for TILT, making it on par with most peer products in the space.
TILT's 12-month trailing dividend yield is 1.46%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
TILT's heaviest allocation is in the Information Technology sector, which is about 21.70% of the portfolio. Its Financials and Healthcare round out the top three.
Taking into account individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) accounts for about 4.37% 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 17.57% of TILT's total assets under management.
Performance and Risk
So far this year, TILT has lost about -14.90%, and is down about -7.97% in the last one year (as of 07/28/2022). During this past 52-week period, the fund has traded between $141.45 and $184.34.
The fund has a beta of 1.09 and standard deviation of 25.28% for the trailing three-year period, which makes TILT a medium risk choice in this particular space. With about 2291 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 $42.81 billion in assets, Vanguard Total Stock Market ETF has $258.28 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?
A smart beta exchange traded fund, the FlexShares Morningstar U.S. Market Factor Tilt ETF (TILT - Free Report) debuted on 09/16/2011, and offers broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $1.46 billion, this makes it one of the larger ETFs in the Style Box - All Cap Blend. TILT is managed by Flexshares. Before fees and expenses, TILT 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.
Operating expenses on an annual basis are 0.25% for TILT, making it on par with most peer products in the space.
TILT's 12-month trailing dividend yield is 1.46%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
TILT's heaviest allocation is in the Information Technology sector, which is about 21.70% of the portfolio. Its Financials and Healthcare round out the top three.
Taking into account individual holdings, Apple Inc Common Stock Usd 0.00001 (AAPL - Free Report) accounts for about 4.37% 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 17.57% of TILT's total assets under management.
Performance and Risk
So far this year, TILT has lost about -14.90%, and is down about -7.97% in the last one year (as of 07/28/2022). During this past 52-week period, the fund has traded between $141.45 and $184.34.
The fund has a beta of 1.09 and standard deviation of 25.28% for the trailing three-year period, which makes TILT a medium risk choice in this particular space. With about 2291 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 $42.81 billion in assets, Vanguard Total Stock Market ETF has $258.28 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.