ETF Spotlight on the FlexShares Morningstar U.S. Market Factor Tilt Index Fund (NYSEArca: TILT), part of an ongoing series.
Assets: $699.3 million
Objective: The FlexShares Morningstar U.S. Market Factor Tilt Index ETF tries to reflect the performance of the Morningstar U.S. Market Factor Tilt Index, which provides enhanced exposure to U.S. equities by tilting the portfolio toward long-term growth potential of small-cap and value stocks.
Holdings: Top holdings include Apple (NasdaqGS: AAPL) 1.9%, Exxon Mobil (NYSE: XOM) 1.3%, Microsoft (NasdaqGS: MSFT) 1.1%, Johnson & Johnson (NYSE: JNJ) 1.0% and General Electric (NYSE: GE) 0.9%.
What You Should Know:
- Norther Trust’s FlexShares sponsors the fund.
- TILT has a 0.27% expense ratio.
- The ETF has 2,584 holdings and the top ten components make up 9.8% of the overall portfolio.
- Sector allocations include financials 19.4%, information technology 17.6%, consumer discretionary 13.4%, industrials 12.3%, health care 12.3%, energy 8.7%, consumer staples 6.8%, materials 4.5%, utilities 3.3% and telecom services 1.6%.
- Market-capitalization weights include large-cap 57.6%, mid-cap 34.2%, small-cap 6.6% and micro-cap 1.6%.
- Style allocations include value- 34.3%, core 35.2% and growth 30.5%.
- The portfolio shows a price-to-earnings ratio of 17.4.
- TILT is up 4.5% over the past month, up 4.1% over the last three months and up 7.0% year-to-date.
- The fund is trading 7.6% above its 200-day exponential moving average.
- The ETF tries to enhance returns by tilting the portfolio toward small-cap and value stocks.
- However, the focus could cause the ETF to underperform in certain market conditions, such as a bearish market environment when small-cap stocks underperform large-cap categories.
Next page: The latest news
The Latest News:
- Value stocks have been outperforming growth stocks.
- “In the past two months there was an overwhelming preference for value over growth—it’s pretty dramatic to see a split like that,” David Santschi, chief executive of TrimTabs Investment Research Inc., said in a Wall Street Journal article.
- Market observers now argue that the rotation into value could stay.
- “Growth and value leadership tends to be cyclical in nature,” David Koenig, a strategist at Russell Investments, said in the WSJ article. The market has clearly “moved in 2014 into value leadership.”
- The Russell 2000 has retraced nearly all of its losses after a 9.3 decline through May 15 and touched an intra-day high July 1, Bloomberg reports.
FlexShares Morningstar U.S. Market Factor Tilt Index Fund
For past stories in this series, visit our ETF Spotlight category.