How does the TLTE ETF select its holdings?

The TLTE ETF derives its holdings by using a proprietary blended multi-factor score developed by Northern Trust (NTI), the index provider. This score assesses companies based on their quality, value, and momentum characteristics relative to the starting universe of U.S. large-cap equities.

What is the objective of the TLTE ETF's underlying index?

The underlying index for the TLTE ETF is designed to maximize exposure to quality, value, and momentum factors while minimizing overall risk compared to the starting universe. The index employs an optimization process to select and weight eligible securities, considering several constraints like sector, industry group, single-security weight, beta, liquidity, and turnover.

What is the investment strategy of the TLTE ETF?

The TLTE ETF follows a "passive" or indexing approach, meaning it does not aim to outperform the index it tracks. Instead, it uses a representative sampling strategy to invest in a portfolio of securities that collectively replicates the investment profile of the underlying index.

What types of companies are included in the TLTE ETF?

The TLTE ETF includes a selection of U.S. large-cap companies that demonstrate strong quality, value, and momentum characteristics relative to the Northern Trust 1250 Index. The fund's holdings may be concentrated in specific sectors or industries, with a focus on Information Technology as of December 31, 2022.

5 min read

By Beqa Bumbeishvili, ETF Insider

What is the TLTE ETF ?

TLTE ETF: Overview

The TLTE ETF, short for "Ticker Large and Value," is an exchange-traded fund designed to reflect the performance of a specific selection of companies with a greater exposure to size and value factors compared to the Morningstar Emerging Markets Index, which includes companies incorporated in emerging-market countries. The fund aims to achieve a "factor tilt" by adjusting constituent weights to emphasize companies with smaller market capitalizations or lower valuations, as determined by the Index Provider, Morningstar, Inc. The TLTE ETF seeks to provide increased risk-return characteristics relative to the broader emerging equity market and includes companies with potential size and value risk premiums.

TLTE ETF Underlying and Exposure: What Does It Track and How?

The TLTE ETF follows a passive or indexing approach, meaning it aims to replicate the performance of the Underlying Index rather than attempting to outperform it. Unlike actively managed funds, the TLTE ETF does not seek temporary defensive positions during market declines or overvalued periods. Instead, it uses a representative sampling strategy, investing in a sample of securities that collectively mirrors the investment profile of the Underlying Index. While the Fund may or may not hold all securities in the Underlying Index, it reserves the right to invest substantially in all index constituents if deemed beneficial.
The Underlying Index is governed by objective rules for security selection, exclusion, rebalancing, and adjustments for corporate actions. It undergoes semi-annual reconstitution and quarterly rebalancing, which is generally followed by the TLTE ETF.

TLTE overlap What is the TLTE ETF ?

TLTE ETF: Benefits of Investing

Investing in the TLTE ETF offers several advantages to investors. Firstly, the fund provides exposure to companies with potential size and value risk premiums, which have historically demonstrated positive performance over a full market cycle. Additionally, the ETF's passive management style ensures low expense ratios and reduces the impact of fund manager decisions on returns. The TLTE ETF's focus on emerging-market countries presents an opportunity to tap into the growth potential of these regions.
Furthermore, the ETF's inherent diversification across multiple companies and sectors can reduce the risk associated with individual stocks. Investors seeking long-term growth prospects and a diversified approach to emerging markets may find the TLTE ETF appealing.

TLTE ETF: Considerations Before Investing

While the TLTE ETF offers compelling benefits, potential investors must consider certain factors before making investment decisions. As with any investment, there are risks involved. The fund's performance is closely tied to the performance of the Underlying Index, which can be affected by market conditions and changes in economic dynamics. Additionally, concentrating investments in specific industries or regions, such as the Fund's focus on China and Taiwan, can increase sector-specific risks.
Furthermore, investors should carefully review the Fund's prospectus and underlying holdings to ensure alignment with their investment goals and risk tolerance. As with all investments, past performance does not guarantee future results, and investors should exercise caution and conduct thorough research before committing capital.

Conclusion

In conclusion, the TLTE ETF offers investors exposure to a selection of companies with a greater emphasis on size and value factors within emerging-market countries. The ETF follows a passive investment strategy, seeking to replicate the performance of its Underlying Index. Investors looking for diversified exposure to the growth potential of emerging markets may find the TLTE ETF an attractive addition to their portfolios.

Disclaimer: This article provides information about the TLTE ETF for educational purposes only. It does not constitute investment advice or any form of financial recommendation. Readers should conduct their due diligence and consult with a qualified financial advisor before making any investment decisions. The author of this article is not providing any investment advisory services.

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FAQ

What is the TLTE ETF?
The TLTE ETF, also known as the Northern Trust Quality Factor ETF, is an exchange-traded fund that aims to provide investors with exposure to a selection of U.S. large-cap companies that have greater exposure to quality, value, and momentum factors relative to the Northern Trust 1250 Index.
How does the TLTE ETF select its holdings?
The TLTE ETF derives its holdings by using a proprietary blended multi-factor score developed by Northern Trust (NTI), the index provider. This score assesses companies based on their quality, value, and momentum characteristics relative to the starting universe of U.S. large-cap equities.
What is the objective of the TLTE ETF's underlying index?
The underlying index for the TLTE ETF is designed to maximize exposure to quality, value, and momentum factors while minimizing overall risk compared to the starting universe. The index employs an optimization process to select and weight eligible securities, considering several constraints like sector, industry group, single-security weight, beta, liquidity, and turnover.
What is the investment strategy of the TLTE ETF?
The TLTE ETF follows a "passive" or indexing approach, meaning it does not aim to outperform the index it tracks. Instead, it uses a representative sampling strategy to invest in a portfolio of securities that collectively replicates the investment profile of the underlying index.
What types of companies are included in the TLTE ETF?
The TLTE ETF includes a selection of U.S. large-cap companies that demonstrate strong quality, value, and momentum characteristics relative to the Northern Trust 1250 Index. The fund's holdings may be concentrated in specific sectors or industries, with a focus on Information Technology as of December 31, 2022.

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