TLEH essentially acts like a hedged version of FlexShares’ popular emerging market fund, the FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (NYSEArca: TLTE). The new ETF includes a 100% position in TLTE but counteracts currency risks with currency forwards that correspond with its country weights, including Hong Kong, South Korea, Taiwan, India, South Africa, Brazil, Mexico, Malaysia, Thailand and Russia.
TLDH tries to reflect the performance of the Morningstar Developed Markets ex-US Factor Tilt Hedged Index, which tries to enhance exposure to international stock markets by tilting toward long-term growth potential of smaller-cap and value segments while hedging foreign exchange fluctuations.
The currency-hedged developed markets ETF also leans toward small-caps and value. Market-cap weights include micro-cap 0.38%, small-cap 29.7%, mid-cap 14.7% and large-cap 56.2%. Style weights include value 43.0%, blend 32.9% and growth 24.1%.
TLDH also includes a position in the non-hedged FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund (NYSEArca: TLTD), along with currency forwards to hedge against currencies of Japan, U.K., France, Canada, Germany, Switzerland, Australia, Hong Kong, Italy and Sweden.
For more information on new fund products, visit our new ETFs category.
Max Chen contributed to this article.