Is FlexShares Morningstar Emerging Markets Factor Tilt ETF (TLTE) a strong ETF right now?

Making its debut on 09/25/2012, smart beta exchange traded fund FlexShares Morningstar Emerging Markets Factor Tilt ETF (TLTE - Free Report) provides investors broad exposure to the Broad Emerging Market ETFs category of the market.

What are smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund sponsor and index

The fund is managed by Flexshares, and has been able to amass over $284.42 million, which makes it one of the average sized ETFs in the Broad Emerging Market ETFs. Before fees and expenses, this particular fund seeks to match the performance of the Morningstar Emerging Markets Factor Tilt Index.

The Morningstar Emerging Markets Factor Tilt Index reflects the performance of a selection of equity securities designed to provide broad exposure to the global emerging equities markets, with increased exposure to small-capitalization stocks and value stocks.

Cost and other expenses

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

Annual operating expenses for TLTE are 0.57%, which makes it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 3.76%.

Sector exposure and top holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Taiwan Semiconductor Manufacturing Co Ltd Common accounts for about 5.23% of total assets, followed by Samsung Electronics Co Ltd Common Stock Krw 100 and Tencent Holdings Ltd Common Stock Hkd 0.00002.

The top 10 holdings account for about 18.82% of total assets under management.

Performance and risk

Year-to-date, the FlexShares Morningstar Emerging Markets Factor Tilt ETF return is roughly 25.63% so far, and is up roughly 22.4% over the last 12 months (as of 11/25/2025). TLTE has traded between $46.89 $65.60 in this past 52-week period.

The ETF has a beta of 0.66 and standard deviation of 14.65% for the trailing three-year period, making it a medium risk choice in the space. With about 3029 holdings, it effectively diversifies company-specific risk .

Alternatives

FlexShares Morningstar Emerging Markets Factor Tilt ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

Vanguard FTSE Emerging Markets ETF (VWO) tracks FTSE Emerging Markets All Cap China A Inclusion Index and the iShares Core MSCI Emerging Markets ETF (IEMG) tracks MSCI Emerging Markets Investable Market Index. Vanguard FTSE Emerging Markets ETF has $102.6 billion in assets, iShares Core MSCI Emerging Markets ETF has $115.15 billion. VWO has an expense ratio of 0.07% and IEMG changes 0.09%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market ETFs.

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