Factor investing made easy—the statement in and of itself seems to contrast, but exchange-traded fund (ETF) provider FlexShares has three funds that can do just that. Investors don’t have to play the guessing game on which factors work in the current market environment while getting targeted exposure to markets within or outside the United States.
For domestic exposure, investors can look at the FlexShares Morningstar US Market Factors Tilt Index Fund (TILT). The fund gives access to U.S. equities across a broad spectrum of market caps for better diversification and to prevent overconcentration.
TILT seeks investment results that correspond generally to the price and yield performance of the Morningstar® US Market Factor Tilt Index. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to size and value factors relative to the Morningstar US Market Index, a float-adjusted market capitalization-weighted index of U.S.-incorporated large-, mid-, small-, and micro-capitalization companies.
“The resulting fund seeks to reflect the experience of investing in the broad equity market while reducing the risk of overconcentration in large-cap stocks and pursuing the excess return potential from the value and small size factors,” FlexShares said.
Factor Tilting With International Exposure
Investors who want to venture abroad for diversified exposure, but want to maintain a factor-tilting strategy can look at funds like the FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund (TLTD). TLTD seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar® Developed Markets ex-US Factor Tilt Index.
The index reflects the performance of a selection of companies that, in aggregate, possess greater exposure to size and value factors relative to the Morningstar Developed Markets ex-US Index. The index is a float-adjusted market capitalization-weighted index of companies incorporated in developed market countries, excluding the U.S.
For emerging markets (EM) exposure, there’s the FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (TLTE). Given the strength of the dollar and global inflation, EM can be a tricky market to navigate, warranting strategic exposure to funds like TLTE.
TLTE seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar® Emerging Markets Factor Tilt Index. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to size and value factors relative to the Morningstar Emerging Markets Index, a float-adjusted market capitalization-weighted index of companies incorporated in emerging market countries.
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