The FlexShares Morningstar Emerging Markets Factor Tilt ETF (TLTE) made its debut on 09/25/2012, and is a smart beta exchange traded fund that provides broad exposure to the Broad Emerging Market ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Flexshares, and has been able to amass over $345.99 million, which makes it one of the average sized ETFs in the Broad Emerging Market ETFs. TLTE, before fees and expenses, 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 & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.57%.
It has a 12-month trailing dividend yield of 3.31%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, 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 6.92% of total assets, followed by Samsung Electronics Co Ltd Common Stock Krw 100 and Sk Hynix Inc Common Stock Krw 5000.
TLTE's top 10 holdings account for about 26.24% of its total assets under management.
Performance and Risk
Year-to-date, the FlexShares Morningstar Emerging Markets Factor Tilt ETF has gained about 18.12% so far, and is up roughly 29.19% over the last 12 months (as of 08/11/2026). TLTE has traded between $60.19 $80.51 in this past 52-week period.
The ETF has a beta of 0.68 and standard deviation of 17.63% for the trailing three-year period, making it a medium risk choice in the space. With about 3023 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 Emerging Markets Stock Index Fund ETF Shares (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 Emerging Markets Stock Index Fund ETF Shares has $125.94 billion in assets, iShares Core MSCI Emerging Markets ETF has $155.69 billion. VWO has an expense ratio of 0.06% 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
Bottom Line
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FlexShares Morningstar Emerging Markets Factor Tilt ETF (TLTE): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).