FlexShares Expands Its ‘Factor Tilt’ ETF Lineup
October 1st, 2012 at 3:30pm by Tom Lydon
FlexShares, the exchange traded fund unit of Northern Trust, launched two new fund products based on the multi-factor model approach that will provide a heavier emphasis on international small-caps and value stocks.
FlexShares Morningstar Developed Markets Ex-US Factor Tilt Index Fund (NYSEArca: TLTD) and the FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (NYSEArca: TLTE) began trading.
The factor-based or smart beta strategy select securities based on specific characteristics.
The underlying Morningstar Developed Markets ex-US Factor Tilt Index and the Morningstar Emerging Markets Factor Tilt Index both assign a greater allocation toward small-cap and value stocks and a lesser weighting toward large or growth stocks, compared to traditional market-cap indices.
“Think of it as pouring out exposure into a series of glasses,” Shundrawn Thomas, managing director and global head of ETFs at Northern Trust, said in an Investor Advisor article. “One of those glasses is marked ‘small-cap’ and one is marked ‘value’ – we’d pour a little bit more into those two glasses than the rest.”
“Now, with our two additional tilted index funds, investors have the ability to apply the strategy to investments across the globe,” Thomas said in a press release.
TLTD holds stocks located in developed countries around the world, excluding the U.S. The fund has 1,336 holdings, with a market-cap breakdown of 58.3% in large-caps, 16.7% in mid-caps, 23.9% in small-caps and 1.1% in micro-caps. The ETF has a 0.42% expense ratio.
Sector allocations include financials 23.7%, industrials 14.5%, consumer discretionary 12.3%, materials 11.0%, consumer staples 9.5%, energy 9.2%, health care 7.7%, info tech 4.7%, telecom services 4.3% and utilities 3.3%.
Country allocations include Japan 20.4%, U.K. 16.9%, Canada 10.9%, Australia 7.6%, France 6.7%, Germany 6.6%, Switzerland 6.3%, U.S. 4.6%, Sweden 2.9% and Hong Kong 2.6%.
TLTE holds stocks located in developing markets around the world. The fund has 1,056 holdings, with a market-cap breakdown of 47.9% in large-caps, 19.6% in mid-caps, 29.2% in small-caps and 3.4% in micro-caps. The ETF has a 0.65% expense ratio.
Sector allocations include financials 22.2%, info tech 13.8%, materials 12.9%, consumer discretionary 10.7%, energy 10.5%, industrials 9.9%, consumer staples 8.1%, telecom services 6.4%, utilities 3.5% and health care 1.8%.
Country allocations include S. Korea 15.9%, Taiwan 13.4%, Brazil 12.1%, South Africa 9.9%, Hong Kong 9.2%, China 8.7%, U.S. 7.4%, Mexico 5.0%, Malaysia 3.5% and Indonesia 3.1%.
The two new funds will join the FlexShares Morningstar U.S. Market Factor Tilt Index Fund (NYSEArca: TILT), which has gathered $126.1 million in assets since trading began on Sept. 16, 2011.
For more information on new fund products, visit our new ETFs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.