FlexShares Exchange Traded Funds, begun trading of 2 new ETFs, the FlexShares Currency Hedged Morningstar DM ex-US Factor Tilt Index Fund (NYSE Arca: TLDH) and the FlexShares Currency Hedged Morningstar EM Factor Tilt Index Fund (NYSE Arca: TLEH) on Thuesday, November 10, 2015.
1.
FUND INFORMATION:
| Symbol: TLDH | Exchange: NYSE Arca |
| Name: FlexShares Currency Hedged Morningstar DM ex-US Factor Tilt Index Fund | Net Expense Ratio: 0.47% |
FUND OBJECTIVE:
The FlexShares Currency Hedged Morningstar DM ex-US Factor Tilt Index Fund 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 Hedged Index.
Currently, the Fund achieves its investment objective by investing a substantial portion of its assets in the FlexShares Morningstar Developed Markets ex-US Factor Tilt Index Fund (TLTD). The Fund may also invest directly in the securities included in the Underlying Index.
REFERENCE INDEX:
The Morningstar Developed Markets ex-US Factor Tilt Hedged Index reflects the performance of a selection of equity securities designed to provide broad exposure to the global developed equities markets, excluding the U.S., with:
(i) increased exposure (or a “tilt”) to small-capitalization stocks and value stocks and
(ii) currency risk of the securities included in the Index hedged against the U.S. dollar on a monthly basis.
Small-capitalization and value stocks in the Underlying Index are weighted slightly more than such stocks would be in an index that is solely market-capitalization weighted, all as determined by Morningstar, Inc. (Index Provider) pursuant to its index methodology. In addition to tracking the performance of the Underlying Index, the Investment Adviser seeks to minimize portfolio turnover and tax inefficiencies. The Underlying Index is governed by published, objective rules for security selection, exclusion, rebalancing and adjustments for corporate actions and is reconstituted on a semi-annual basis and is rebalanced quarterly.
The Underlying Index uses a methodology that sells forward the total value of the non-U.S. dollar denominated securities included in the Underlying Index at a one-month forward rate to effectively create a “hedge” against fluctuations in the relative value of the component currencies in relation to the U.S. dollar. The hedge is reset on a monthly basis.
As of October 20, 2015, the Underlying Index was comprised of 2,945 issues with market capitalizations ranging from $54.7 million to $252.8 billion.
Top Holdings (Underlying – TLTD):
| TOYOTA MOTOR CORP | 1.157% |
| NESTLE SA | 1.042% |
| NOVARTIS AG | 1.041% |
| HSBC HOLDINGS PLC | 0.996% |
| ROCHE HOLDING AG | 0.795% |
| TOTAL SA | 0.777% |
| BP PLC | 0.676% |
| ROYAL DUTCH SHELL PLC | 0.646% |
| MITSUBISHI UFJ FINANCIAL GROUP INC | 0.617% |
| DAIMLER AG | 0.543% |
Top 5 Countries:
| Japan | 26.00% |
| UK | 18.81% |
| France | 7.47% |
| Canada | 7.44% |
| Germany | 6.79% |
Sector Allocation:
| Financials | 26.78% |
| Industrilas | 15.81% |
| Consumer Discretionary | 15.20% |
| Consumer Staples | 8.81% |
| Health Care | 8.08% |
| Materials | 7.76% |
| Energy | 6.02% |
| Info Technology | 5.11% |
| Telecom Services | 3.44% |
| Utilities | 3.10% |
Useful Links:
TLDH Home Page
2.
FUND INFORMATION:
| Symbol: TLEH | Exchange: NYSE Arca |
| Name: FlexShares Currency Hedged Morningstar EM Factor Tilt Index Fund | Net Expense Ratio: 0.70% |
FUND OBJECTIVE:
The FlexShares Currency Hedged Morningstar EM Factor Tilt Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Morningstar Emerging Markets Factor Tilt Hedged Index.
Currently, the Fund achieves its investment objective by investing a substantial portion of its assets in the FlexShares Morningstar Emerging Markets Factor Tilt Index Fund (TLTE). The Fund may also invest directly in the securities included in the Underlying Index.
REFERENCE INDEX:
The Morningstar Emerging Markets Factor Tilt Hedged Index reflects the performance of a selection of equity securities designed to provide broad exposure to the global emerging equities markets, with
(i) increased exposure (or a “tilt”) to small-capitalization stocks and value stocks and
(ii) currency risk of the securities included in the Index hedged against the U.S. dollar on a monthly basis.
Small-capitalization and value stocks in the Underlying Index are weighted slightly more than such stocks would be in an index that is solely market-capitalization weighted, all as determined by Morningstar, Inc. (Index Provider) pursuant to its index methodology. In addition to tracking the performance of the Underlying Index, the Investment Adviser seeks to minimize portfolio turnover and tax inefficiencies. The Underlying Index is governed by published, objective rules for security selection, exclusion, rebalancing and adjustments for corporate actions and is reconstituted on a semi-annual basis and is rebalanced quarterly. The Underlying Index uses a methodology that sells forward the total value of the non-U.S. dollar denominated securities included in the Underlying Index at a one-month forward rate to effectively create a “hedge” against fluctuations in the relative value ofthe component currencies in relation to the U.S. dollar.
As of October 20, 2015, the Underlying Index was comprised of 2,352 issues with market capitalizations ranging from $107.9 million to $253.5 billion
Top Holdings (Underlying – TLTE):
| SAMSUNG ELECTRONICS CO LTD | 2.672% |
| TENCENT HOLDINGS LTD | 1.995% |
| TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD | 1.498% |
| CHINA CONSTRUCTION BANK CORP | 1.344% |
| CHINA MOBILE LTD | 1.223% |
| NASPERS LTD | 1.182% |
| INDUSTRIAL & COMMERCIAL BANK OF CHINA LTD | 0.923% |
| BANK OF CHINA LTD | 0.663% |
| HON HAI PRECISION INDUSTRY CO LTD | 0.651% |
| PING AN INSURANCE GROUP CO OF CHINA LTD | 0.558% |
Top 5 Countries:
| China | 23.15% |
| S.Korea | 16.65% |
| Taiwan | 14.53% |
| India | 8.46% |
| S.Africa | 7.31% |
Sector Allocation:
| Financials | 26.57% |
| Info Technology | 17.34% |
| Consumer Discretionary | 11.45% |
| Industrilas | 9.98% |
| Materials | 8.54% |
| Consumer Staples | 8.34% |
| Energy | 5.54% |
| Telecom Services | 4.99% |
| Health Care | 3.76% |
| Utilities | 3.40% |
Useful Links:
TLEH Home Page
ETFtrack Comment:
“International equity exposure is a core element of many portfolios seeking long-term growth as developed markets allow investors to expand their opportunity set beyond U.S. borders. Our research shows that employing a tilted approach to capturing size and value factors potentially adds value to global equity strategies,” said Shundrawn A. Thomas, head of Northern Trust’s Funds and Managed Accounts Group. “Currency fluctuations, however, add complexity when implementing an international strategy, especially during times of monetary intervention. By hedging the currency exposure in a tilted strategy, the resulting portfolio may provide optimal exposure while reducing potential volatility from currency fluctuations.”