FlexShares, the ETF unit of Chicago-based Northern Trust, today
is rolling out two more factor-based equities ETFs, one being an
emerging markets version of a U.S. small-cap and value-tilt
ETF it launched a year ago, and the other a developed-market
The FlexShares Morningstar Emerging Markets Factor Tilt Index
Fund (NYSEArca:TLTE) will replicate a Morningstar index that
assigns more weight to small-cap and value stocks than would a
traditional cap-weighted methodology. The underlying benchmark
includes nearly 2,000 securities. TLTE is set to cost 0.65 percent
in annual fees, the company said in its latest prospectus
detailing the fund.
The FlexShares Morningstar Developed Markets ex-US Factor Tilt
Index Fund (NYSEArca:TLTD) follows the same factor-tilt as TLTE,
but focuses on developed economies excluding the U.S. Its benchmark
comprises more than 3,000 stocks, and the fund will cost 0.42
percent in total expenses, according to the most recent filing
the company submitted to regulators earlier this month.
Both funds would join FlexShares' Morningstar U.S. Market
Factor Tilt Index Fund (NYSEArca:TILT), which has gathered
some $116 million since it came to market a year ago, and it has
kept up pace with the broad stock market rally, with gains of more
than 16 percent year-to-date.
Indeed, FlexShares seems to be making a strong push into the
factor-based strategies, often called smart beta or intelligent
beta strategies. Such smart-beta products cherry-pick securities
with certain characteristics with a view to managing risk the way
an active manager might, only with rules-based indexes instead.
The indexes benchmarking the funds are to be rebalanced
quarterly and reconstituted on a semiannual basis.
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