product strategy comparison - presentation...

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


MSCIEMGrowthNRUSD

12/29/2000

ÙÙÙÙ

Equity

UnitedStates


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


PeerGroup(5‐95%):ExchangeTradedFunds‐ U.S.‐ Diversi�iedEmergingMktsCalculationBenchmark:MSCIEMNRUSD


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


ROLLING6MONTHALPHA

ROLLING6MONTHBETA

PeerGroup(5‐95%):ExchangeTradedFunds‐ U.S.‐ Diversi�iedEmergingMktsCalculationBenchmark:MSCIEMNRUSD


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



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EQUITYSTYLEVALUATION

PortfolioDate:3/31/2015

%

Value 55.0

Core 30.3

Growth 14.7


REGIONALEXPOSURE

GICsSECTOREXPOSURE


%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%


%

DevelopedMarkets 21.8

EmergingMarkets 78.2


%

Value 20.2

Core 34.0

Growth 45.8

EQUITYSTYLEVALUATION


GICsSECTOREXPOSURE


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%


%BasicMaterials 3.9ConsumerCyclical 8.0FinancialServices 21.8RealEstate 2.3ConsumerDefensive 11.6Healthcare 4.4Utilities 3.1CommunicationServices 3.3Energy 2.7Industrials 6.4Technology 32.5


%

DevelopedMarkets 31.1

EmergingMarkets 68.9

REGIONALEXPOSURE

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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


Equity

Peergrouprankofpeergroupcount

Median

Average

StdDev

Equity+Diversi�iedEmergingMkts


Median

Average

StdDev

Equity+Diversi�iedEmergingMkts+Diversi�iedEmergingMarkets


Median

Average

StdDev

Equity+Diversi�iedEmergingMkts+Diversi�iedEmergingMarkets+ReturnOriented


Median

Average

StdDev

Equity+Diversi�iedEmergingMkts+Diversi�iedEmergingMarkets+ReturnOriented+Multiple


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


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


Equity


Median

Average

StdDev

Equity+Diversi�iedEmergingMkts


Median

Average

StdDev

Equity+Diversi�iedEmergingMkts+Diversi�iedEmergingMarkets


Median

Average

StdDev

Equity+Diversi�iedEmergingMkts+Diversi�iedEmergingMarkets+ReturnOriented


Median

Average

StdDev

Equity+Diversi�iedEmergingMkts+Diversi�iedEmergingMarkets+ReturnOriented+Growth


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


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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




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


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



UpCaptureRatio

DownCaptureRatio

0.0 20.0 40.0 60.0 80.0 100.0 120.00.020.040.060.080.0100.0120.0



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

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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

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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

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