Making its debut on 12/13/2016, smart beta exchange traded fund Nuveen ESG LargeCap Growth ETF (NULG) provides investors broad exposure to the Style Box – Large Cap Growth category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you’re the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
NULG is managed by Nuveen, and this fund has amassed over $896.28 million, which makes it one of the average sized ETFs in the Style Box – Large Cap Growth. NULG, before fees and expenses, seeks to match the performance of the TIAA ESG USA Large-Cap Growth Index.
The TIAA ESG USA Large-Cap Growth Index is comprised of equity securities of large capitalization companies listed on US exchanges & meet ESG criteria & exhibit overall growth style characteristics based on long-term forward EPS growth rate, short-term forward EPS growth rate, current internal growth rate, long-term historical EPS growth trend & long-term historical sales per share growth trend.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF’s expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.25%.
The fund has a 12-month trailing dividend yield of 5.44%.
Sector Exposure and Top Holdings
It is important to delve into an ETF’s holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 42.70% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Discretionary and Telecom round out the top three.
When you look at individual holdings, Microsoft Corp (MSFT) accounts for about 12.16% of the fund’s total assets, followed by Tesla Inc (TSLA) and Alphabet Inc-Cl A (GOOGL).
The top 10 holdings account for about 44.2% of total assets under management.
Performance and Risk
The ETF has lost about -6.55% so far this year and was up about 17.87% in the last one year (as of 01/10/2022). In the past 52-week period, it has traded between $54.52 and $74.13.
The fund has a beta of 1.04 and standard deviation of 23.58% for the trailing three-year period. With about 80 holdings, it effectively diversifies company-specific risk.
Nuveen ESG LargeCap Growth ETF is a reasonable option for investors seeking to outperform the Style Box – Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
IShares ESG Aware MSCI EAFE ETF (ESGD) tracks MSCI EAFE ESG Focus Index and the iShares ESG Aware MSCI USA ETF (ESGU) tracks MSCI USA ESG Focus Index. IShares ESG Aware MSCI EAFE ETF has $7.62 billion in assets, iShares ESG Aware MSCI USA ETF has $25.44 billion. ESGD has an expense ratio of 0.20% and ESGU charges 0.15%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box – Large Cap Growth.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Nuveen ESG LargeCap Growth ETF (NULG): ETF Research Reports
Microsoft Corporation (MSFT): Free Stock Analysis Report
Tesla, Inc. (TSLA): Free Stock Analysis Report
Alphabet Inc. (GOOGL): Free Stock Analysis Report
iShares ESG Aware MSCI EAFE ETF (ESGD): ETF Research Reports
iShares ESG Aware MSCI USA ETF (ESGU): ETF Research Reports
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