product strategy comparison - morningstar, inc....fems emerging markets strategy 1® etf peer group...
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ProductStrategyComparison
PreparedFor: ClientName
PreparedBy: WholesalerName
FEMSEmerging Markets Strategy 1® ETF
SHORTTERMINVESTMENTGROWTHOF$10,000
OBJECTIVE&STRATEGY
Theinvestmentseeksinvestmentresultsthatcorrespondgenerallytothepriceandyield(beforethefund'sfeesandexpenses)ofanequityindexcalledtheDe�inedEmergingMarketsSmallCapIndex.Thefundwillnormallyinvestatleast90%ofitsnetassetsincommonstocksand/ordepositaryreceiptsthatcomprisetheindex.Theindexisamodi�iedequal‐dollarweightedindexcalculatedbySPDJIbasedonselectsmallcapsecuritiesfromtheS&PEmergingMarketsBMIIndexthatmaygeneratepositivealpharelativetotraditionalpassive‐styleindicesthroughtheuseoftheAlphaDEX(R)selectionmethodology.Itisnon‐diversi�ied.
FUNDFACTS
FundInception
ETFTicker
CUSIP
GrossExpenseRatio
NetExpenseRatio
FirmName
Exchange
MorningstarCategory
ProspectusBenchmarkIndex
BenchmarkIndexInception
MorningstarRatingOverall
GlobalBroadCategoryGroup
CountryAvailableforSale
2/15/2012
FEMS
33737J307
0.80
0.80
FirstTrust
NYSEARCA
USETFDiversi�iedEmergingMkts
De�inedEmergingMarketsSCTRUSD
7/29/2014
ÙÙÙÙÙ
Equity
UnitedStates
EmergingMarketsStrategy1®ETF
OBJECTIVE&STRATEGY
TheinvestmentseekstotracktheinvestmentresultsoftheMSCIEmergingMarketsGrowthIndex.Theunderlyingindexgenerallyrepresentsapproximately50%oftheMSCIEmergingMarketsIndexandconsistsofthosesecuritiesclassi�iedbyMSCIInc.("MSCI")asmostrepresentingthegrowthstyle.Thefundgenerallyinvestsatleast80%ofitsassetsinsecuritiesoftheunderlyingindexorindepositaryreceiptsrepresentingsecuritiesintheunderlyingindex.Itisnon‐diversi�ied.
FUNDFACTS
FundInception
ETFTicker
CUSIP
GrossExpenseRatio
NetExpenseRatio
FirmName
Exchange
MorningstarCategory
ProspectusBenchmarkIndex
BenchmarkIndexInception
MorningstarRatingOverall
GlobalBroadCategoryGroup
CountryAvailableforSale
2/8/2012
EGRW
464286467
0.68
0.49
iShares
NASDAQ
USETFDiversi�iedEmergingMkts
MSCIEMGrowthNRUSD
12/29/2000
ÙÙÙÙ
Equity
UnitedStates
EmergingMarketsStrategy2®ETF
TimePeriod:2/16/2012to5/31/2015
PeerGroup(5‐95%):ExchangeTradedFunds‐ U.S.‐ Diversi�iedEmergingMkts
TopQuartile 2ndQuartile 3rdQuartile BottomQuartile
5/2012 11/2012 5/2013 11/2013 5/2014 11/2014 5/20157,000.0
7,750.0
8,500.0
9,250.0
10,000.0
10,750.0
11,500.0
12,250.0
13,000.0
13,750.0
EmergingMarketsStrategy1®ETF 13,142.5 EmergingMarketsStrategy2®ETF 10,974.1 USETFDiversi�iedEmergingMkts 10,102.1
Page1of7
Source:MorningstarDirect
FEMSEmerging Markets Strategy 1® ETF
PeerGroup(5‐95%):ExchangeTradedFunds‐ U.S.‐ Diversi�iedEmergingMktsCalculationBenchmark:MSCIEMNRUSD
TopQuartile 2ndQuartile 3rdQuartile BottomQuartile
Alpha
‐52.5
‐45.0
‐37.5
‐30.0
‐22.5
6/1/2010‐11/30/2010
12/1/2010‐5/31/2011
6/1/2011‐11/30/2011
12/1/2011‐5/31/2012
6/1/2012‐11/30/2012
12/1/2012‐5/31/2013
6/1/2013‐11/30/2013
12/1/2013‐5/31/2014
6/1/2014‐11/30/2014
12/1/2014‐5/31/2015
‐15.0
‐7.5
0.0
7.5
15.0
22.5
30.0
37.5
45.0
52.5
60.0
EmergingMarketsStrategy1®ETF EmergingMarketsStrategy2®ETF MSCIEMNRUSD
USETFDiversi�iedEmergingMkts
ROLLING6MONTHALPHA
ROLLING6MONTHBETA
PeerGroup(5‐95%):ExchangeTradedFunds‐ U.S.‐ Diversi�iedEmergingMktsCalculationBenchmark:MSCIEMNRUSD
TopQuartile 2ndQuartile 3rdQuartile BottomQuartile
Beta
0.2
0.3
0.4
0.5
0.6
6/1/2010‐11/30/2010
12/1/2010‐5/31/2011
6/1/2011‐11/30/2011
12/1/2011‐5/31/2012
6/1/2012‐11/30/2012
12/1/2012‐5/31/2013
6/1/2013‐11/30/2013
12/1/2013‐5/31/2014
6/1/2014‐11/30/2014
12/1/2014‐5/31/2015
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
EmergingMarketsStrategy1®ETF EmergingMarketsStrategy2®ETF MSCIEMNRUSD
USETFDiversi�iedEmergingMkts
Page2of7
Source:MorningstarDirect
FEMSEmerging Markets Strategy 1® ETF
EQUITYSTYLEVALUATION
PortfolioDate:3/31/2015
%
Value 55.0
Core 30.3
Growth 14.7
EmergingMarketsStrategy1®ETF
REGIONALEXPOSURE
GICsSECTOREXPOSURE
PortfolioDate:3/31/2015
%BasicMaterials 14.1ConsumerCyclical 12.6FinancialServices 4.5RealEstate 27.0ConsumerDefensive 6.6Healthcare 2.2Utilities 4.4CommunicationServices 3.3Energy 1.1Industrials 11.2Technology 12.9
TimePeriod:4/1/2012to3/31/2015
0.0
12.5
25.0
37.5
50.0
62.5
75.0
87.5
100.0
6/2012 9/2012 12/2012 3/2013 6/2013 9/2013 12/2013 3/2014 6/2014 9/2014 12/2014 3/2015
BasicMaterials% ConsumerCyclical% FinancialServices%RealEstate% ConsumerDefensive% Healthcare%Utilities% CommunicationServices% Energy%Industrials% Technology%
PortfolioDate:3/31/2015
%
DevelopedMarkets 21.8
EmergingMarkets 78.2
PortfolioDate:3/31/2015
%
Value 20.2
Core 34.0
Growth 45.8
EQUITYSTYLEVALUATION
EmergingMarketsStrategy2®ETF
GICsSECTOREXPOSURE
TimePeriod:4/1/2012to3/31/2015
0.0
12.5
25.0
37.5
50.0
62.5
75.0
87.5
100.0
6/2012 9/2012 12/2012 3/2013 6/2013 9/2013 12/2013 3/2014 6/2014 9/2014 12/2014 3/2015
BasicMaterials% ConsumerCyclical% FinancialServices%RealEstate% ConsumerDefensive% Healthcare%Utilities% CommunicationServices% Energy%Industrials% Technology%
PortfolioDate:3/31/2015
%BasicMaterials 3.9ConsumerCyclical 8.0FinancialServices 21.8RealEstate 2.3ConsumerDefensive 11.6Healthcare 4.4Utilities 3.1CommunicationServices 3.3Energy 2.7Industrials 6.4Technology 32.5
PortfolioDate:3/31/2015
%
DevelopedMarkets 31.1
EmergingMarkets 68.9
REGIONALEXPOSURE
Page3of7
Source:MorningstarDirect
FEMSEmerging Markets Strategy 1® ETF
STRATEGYDETAILS
ETFTicker
StrategicBeta
StrategicBetaGroup
StrategicBetaAttributes
BrandingName
ManagerTenure(Longest)
ManagerTenure(Average)
FundSize
ProspectusObjective
NumberofHoldings
%AssetsinTop10Holdings
FEMS
Yes
ReturnOriented
Multiple
FirstTrust
3.33
3.33
$42,721,673
Diversi�iedEmergingMarkets
217
10.8%
STRATEGYRETURNPEERANALYSIS
YTD 1Year 3Years
EmergingMarketsStrategy1®ETF
Equity
Peergrouprankofpeergroupcount
Median
Average
StdDev
Equity+Diversi�iedEmergingMkts
Peergrouprankofpeergroupcount
Median
Average
StdDev
Equity+Diversi�iedEmergingMkts+Diversi�iedEmergingMarkets
Peergrouprankofpeergroupcount
Median
Average
StdDev
Equity+Diversi�iedEmergingMkts+Diversi�iedEmergingMarkets+ReturnOriented
Peergrouprankofpeergroupcount
Median
Average
StdDev
Equity+Diversi�iedEmergingMkts+Diversi�iedEmergingMarkets+ReturnOriented+Multiple
Peergrouprankofpeergroupcount
Median
Average
StdDev
12.15 2.08
24,649of74,747 57,364of70,153 35,543of53,474
8.07 11.70 17.18
9.93 14.48 15.94
10.80 19.89 9.27
14.29
21of897 170of813 10of550
4.02 ‐2.29 5.49
4.21 ‐2.14 5.89
3.50 5.46 3.07
3of642 117of607 4of409
3.93 ‐2.26 5.34
4.10 ‐2.10 5.64
2.95 4.72 2.73
1of2 1of2 1of2
5.26 ‐7.91 2.47
5.26 ‐7.91 2.47
0.00 0.00 0.00
1of21 10of10 4of4
6.45 11.00 23.51
6.37 18.50 23.47
5.25 11.57 0.07
EmergingMarketsStrategy1®ETF
ETFTicker
StrategicBeta
StrategicBetaGroup
StrategicBetaAttributes
BrandingName
ManagerTenure(Longest)
ManagerTenure(Average)
FundSize
ProspectusObjective
NumberofHoldings
%AssetsinTop10Holdings
EGRW
Yes
ReturnOriented
Growth
iShares
3.33
2.73
$8,237,394
Diversi�iedEmergingMarkets
436
25.7%
STRATEGYRETURNPEERANALYSISYTD 1Year 3Years
EmergingMarketsStrategy2®ETF
Equity
Peergrouprankofpeergroupcount
Median
Average
StdDev
Equity+Diversi�iedEmergingMkts
Peergrouprankofpeergroupcount
Median
Average
StdDev
Equity+Diversi�iedEmergingMkts+Diversi�iedEmergingMarkets
Peergrouprankofpeergroupcount
Median
Average
StdDev
Equity+Diversi�iedEmergingMkts+Diversi�iedEmergingMarkets+ReturnOriented
Peergrouprankofpeergroupcount
Median
Average
StdDev
Equity+Diversi�iedEmergingMkts+Diversi�iedEmergingMarkets+ReturnOriented+Growth
Peergrouprankofpeergroupcount
Median
Average
StdDev
6.00 1.45
45,981of74,747 58,269of70,153 45,524of53,474
8.07 11.70 17.18
9.93 14.48 15.94
10.80 19.89 9.27
7.35
269of897 196of813 172of550
4.02 ‐2.29 5.49
4.21 ‐2.14 5.89
3.50 5.46 3.07
180of642 135of607 113of409
3.93 ‐2.26 5.34
4.10 ‐2.10 5.64
2.95 4.72 2.73
1of2 1of2 1of2
5.26 ‐7.91 2.47
5.26 ‐7.91 2.47
0.00 0.00 0.00
1of1 1of1 1of1
STRATEGYDETAILS
EmergingMarketsStrategy2®ETF
Page4of7
Source:MorningstarDirect
FEMSEmerging Markets Strategy 1® ETF
TimePeriod:6/1/2010to5/31/2015
11/2010 5/2011 11/2011 5/2012 11/2012 5/2013 11/2013 5/2014 11/2014 5/2015‐27.5
‐25.0
‐22.5
‐20.0
‐17.5
‐15.0
‐12.5
‐10.0
‐7.5
‐5.0
‐2.5
0.0
EmergingMarketsStrategy1®ETF EmergingMarketsStrategy2®ETF MSCIEMNRUSDUSETFDiversi�iedEmergingMkts
DRAWDOWNANALYSIS
EmergingMarketsStrategy1®ETF EmergingMarketsStrategy2®ETF MSCIEMNRUSD
USETFDiversi�iedEmergingMkts
TimePeriod:1/1/2015to3/31/2015
CalculationBenchmark:MSCIEMNRUSD
UpCaptureRatio
DownCaptureRatio0.0 30.0 60.0 90.0 120.0 150.0
0.030.060.090.0120.0150.0
TimePeriod:10/1/2014to3/31/2015
CalculationBenchmark:MSCIEMNRUSD
UpCaptureRatio
DownCaptureRatio
0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0‐50.0‐10.030.070.0110.0150.0190.0
TimePeriod:4/1/2014to3/31/2015
CalculationBenchmark:MSCIEMNRUSD
UpCaptureRatio
DownCaptureRatio
0.0 20.0 40.0 60.0 80.0 100.0 120.00.020.040.060.080.0100.0120.0
TimePeriod:4/1/2013to3/31/2015
CalculationBenchmark:MSCIEMNRUSD
UpCaptureRatio
DownCaptureRatio
0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.00.020.040.060.080.0100.0120.0
UPSIDEDOWNSIDECAPTURE
Page5of7
Source:MorningstarDirect
FEMSEmerging Markets Strategy 1® ETF
PortfolioDate:6/8/2015 Top30holdings:27.02% Other:72.98%
PortfolioWeighting%
Ticker
PositionMarketValue(mil)
LatestDividend
LatestDividend
Date
FutureLandDevelopmentHoldingsLtd
CIFIHoldings(Group)CoLtd
ZallDevelopment(Cayman)HoldingCoLtd
KWGPropertyHoldingLtd
LoganPropertyHoldingsCoLtd
LongBonDevelopmentCoLtd
FantasiaHoldingsGroupCoLtd
ModernlandRealtyTbkClassA
ChinaDongxiang(Group)CoLtd
MaoyeInternationalHoldingsLtd
CashbuildLtd
DogusOtomotivServisVeTicAS
AksaAkrilikKimyaSanayiiAS
XiamenInternationalPortCoLtdHShares
KozaAnadoluMetalMadencilikIsletmeleriAS
YestarInternationalHoldingsCoLtd
TianjinPortDevelopmentHoldingsLtd
EVAPrecisionIndustrialHoldingsLtd
TipcoAsphaltPLCShsForeignRegistered
SwancorInd
TiangongInternationalCoLtd
ChinaZhongwangHoldingsLtd
EquatorialEnergiaSA
InterRAOUESOJSC
EletropauloMetropElectSaoPauloSAPfdShs
ChinaFiberOpticNetworkSystemGroupLtd
WellingHoldingLtd
AsiaVitalComponentsCoLtd
TaiwanLifeInsuranceCoLtd
RealNutriceuticalGroupLtd
1.04 01030 0.45 0.06 5/26/2015
0.91 00884 0.39 0.11 4/21/2015
0.90 02098 0.39 0.06 5/15/2013
0.86 01813 0.37 0.42 6/9/2015
0.82 03380 0.35 0.11 6/4/2015
0.81 2514 0.35 0.40 7/10/2014
0.78 01777 0.33 0.05 5/18/2015
0.77 MDLN 0.33 5.00 8/28/2014
1.21 03818 0.52 0.02 5/19/2014
1.09 00848 0.47 0.01 4/14/2015
0.87 CSB 0.37 3.76 3/23/2015
0.79 DOAS 0.34 0.68 4/9/2015
0.77 AKSA 0.33 0.66 4/2/2015
1.30 03378 0.56 0.06 6/17/2015
0.87 KOZAA 0.37
0.80 02393 0.34 0.03 5/20/2015
0.80 03382 0.34 0.05 6/5/2015
0.77 00838 0.33 0.03 5/26/2015
1.47 TPY1 0.63 0.00 3/6/2015
0.95 4733 0.40 3.51 8/14/2014
0.92 00826 0.39 0.05 5/22/2015
0.76 01333 0.33 0.08 5/19/2015
0.88 EQTL3 0.38 0.48 4/20/2015
0.84 IRAO 0.36 0.00 5/16/2011
0.79 ELPL4 0.34 0.43 4/28/2014
0.80 03777 0.34 0.05 6/5/2014
0.75 00382 0.32 0.08 6/4/2015
0.75 3017 0.32 0.40 9/5/2014
0.96 2833 0.41 0.90 7/15/2011
0.95 02010 0.40 0.04 6/8/2015
Page6of7
Source:MorningstarDirect
FEMSEmerging Markets Strategy 1® ETF
TimePeriod:6/1/2013to5/31/2015
EstimatedFund‐LevelNetFlow‐aggrfromshareclasses(Monthly)
11/2013 5/2014 11/2014 5/2015‐20,000,000.0
‐10,000,000.0
0.0
10,000,000.0
20,000,000.0
EmergingMarketsStrategy1®ETF EmergingMarketsStrategy2®ETF
TLTE’supsidehasbeenbolsteredbythetemerityofChinesebanks,ofwhichthreearefoundamongtheETF’stop10holdings.
ThatbullishnesshasbeenaccruedagainstthebackdropofdividendcutsfromChinesebanks.Amidrisingbaddebt,threeofChina’sfourlargestbanksearlierthismonthannouncedpayoutcutswithone,ChinaCiticBankCorp.,scrappingitsdividendaltogether,accordingtoBloomberg.[EMDividendETFBouncesBack]
Addtothat,paycutsandrestrictionshavesparkedaspateofexecutivedeparturesattheBankofChina,BankofCommunications,andChinaConstructionBank,amongothers.
Remember,the“tilt”inTLTEisawayfromlarge‐capsandtowardshigherallocationstomid‐ andsmall‐capsthanareseeninmostdiversi�iedemergingmarketsETFs.Thatstrategyhasprovenadvantageousinyearsinwhichstate‐controlled�irmshavebeenlaggards.Sinceinception,TLTE’sunderlyingindexhasoutpacedtheMSCIEmergingMarketsIndexbynearly70basispoints,accordingtoFlexSharesdata.
towardthelong‐termgrowthpotentialofsmall‐capandvaluestocks.
Atthecountrylevel,TLTEisnotavastdeparturefromitsaforementionedrivalsasChina,SouthKoreaandTaiwancombinefornearly54%oftheETF’sweight.ThatsaysTLTE’sindexingmethodologyaccountsforitsout‐performanceofequivalent,cap‐weightedfunds.[EMETFstheSmartBetaWay]
Toitscredit,TLTEhasmanagedtooutpaceitsrivalsthisyeardespiterelativelylightexposureto,insomecases,resurgentstate‐runcompanies.AlthoughTLTEhasa26.4%weigtto�inancialservicesnames,oftenasectorchockfullofstate‐runcomapaniesintheemergingworld,theETF’scombinedallocationtoalsostate‐runheavymaterials,telecomandutilitiessectorsislessthan19%.
http://www.etftrends.com/2015/04/tilting‐the‐right‐way‐with‐an‐emerging‐markets‐etf/
April20th,2015at10:30ambyToddShriber
LastFriday’sdeclinesnotwithstanding,emergingmarketsequitiesandtherelevantexchangetradedfundshavebeenimpressiveperformersthisyear.
Investorsaretakingnotice.SincethebeginningofMarch,theVanguardFTSEEmergingMarketsETF(NYSEArca:VWO),thelargestemergingmarketsETF,hasaddednearly$366millioninnewassets.Justlastweek,theiSharesMSCIEmergingMarketsETF(NYSEArca:EEM)addedover$787millioninnewassets.
FEMS,VWOandEEMareamongthemostwell‐knownemergingmarketsETF,butwiththeassetclassrebounding,investorsshouldconsideralternatives,includingtheFlexSharesMorningstarEmergingMarketsFactorTiltIndexFund(NYSEArca:TLTE).
TLTE,whichdebuteinSeptember2012andisnowhometo$237.3millioninassetsundermanagement,isnotyourgrandfather’semergingmarketsETFandthatisOKbecauseTLTE’sbreakfromthetraditionalisdrivingsigni�icantout‐performanceofitspeersthisyear.[ADifferentEMTilt]
WhileEEMandVWOareeachupmorethan8%thisyear,impressivetobesure,TLTEhassurged10.2%.TLTEtrackstheMorningstarEmergingMarketsFactorTiltIndex,whichtriestoprovide“enhancedexposure”toemergingmarketequitiesbytiltingexposure
Page7of7
Source:MorningstarDirect