This is a passive ETF that provides broad exposure to emerging market equities while tilting more weight toward small-cap and value stocks. Built on a market-cap-weighted base, it tilts toward the small-cap and value factors in an effort to raise long-term expected returns.

It suits investors who want broad emerging market exposure while seeking higher long-term expected returns through a small-cap and value factor tilt.

It is an ETF managed by Flexshares using a passive (index-tracking) approach.

The ETF tracks an index that provides exposure to the emerging market equity universe as a whole while tilting more weight toward small-cap and value stocks. Built on a market-cap-weighted base, it tilts toward the small-cap and value factors, reinforcing the small-cap and value characteristics relative to a standard market-cap index. It follows a rules-based strategy aimed at raising long-term expected returns.

• Small-cap and value factor tilt within emerging markets
• Broad emerging market exposure maintained

Assets under management (AUM) stand at $328.9M, and the expense ratio is 0.57% per year.

The main point of comparison is the small-cap and value factor tilt versus a simple market-cap-weighted emerging market ETF.

Emerging market equities react sensitively to global risk appetite, the strength or weakness of the dollar, and the economic conditions of individual countries. A small-cap and value tilt tends to show relative strength when small-cap and value stocks are in favor, and relative weakness when large-cap growth leads the market. Because its construction is rules-based, performance can diverge from a market-cap index.

Fund flows into emerging market factor tilt products vary with global risk appetite, currency movements, and style rotation. When interest in factor investing rises, capital sometimes shifts toward this group of products. It is also worth noting that performance varies with each country's economy and currency variables.

Its strengths are emerging market exposure and the small-cap and value tilt, while emerging market risk, currency exposure, and factor underperformance are considerations.

For emerging market exposure without a factor tilt, direct substitutes include VWO and IEMG, and EEM is another product worth comparing for additional emerging market exposure. The three products shown in the table, FNDE, EMGF, and PXH, differ in their tilt approaches, using fundamental, factor, and fundamental-weighted strategies respectively. This ETF is differentiated by its small-cap and value factor tilt within emerging markets.

Here are the points to review before investing in TLTE. Emerging market exposure and the small-cap and value tilt are attractive, but emerging market risk, currency exposure, and factor underperformance need to be checked in advance. It is also a good idea to compare it with simple emerging market products.

Political and policy risk in each country, currency fluctuations, and underperformance of the small-cap and value factors are the main variables for long-term performance, and a rules-based strategy can see its results diverge from a market-cap index depending on the period. Losses can occur during broad emerging market downturns.

It is a suitable candidate for investors who want broad emerging market exposure with an added small-cap and value factor tilt. For emerging market investing without a factor tilt, products such as VWO and IEMG are options, and for a small-cap and value tilt, it is advisable to compare this product alongside them before choosing.