U.S. markets closed

Is iShares MSCI ACWI Low Carbon Target ETF (CRBN) a Strong ETF Right Now?

Zacks Equity Research

A smart beta exchange traded fund, the iShares MSCI ACWI Low Carbon Target ETF (CRBN) debuted on 12/08/2014, and offers broad exposure to the World ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track 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.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

Managed by Blackrock, CRBN has amassed assets over $518.24 M, making it one of the larger ETFs in the World ETFs. This particular fund, before fees and expenses, seeks to match the performance of the MSCI ACWI Low Carbon Target Index.

The MSCI ACWI Low Carbon Target Index is designed to address two dimensions of carbon exposure ? carbon emissions and potential carbon emissions from fossil fuel reserves.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Annual operating expenses for CRBN are 0.20%, which makes it one of the least expensive products in the space.

CRBN's 12-month trailing dividend yield is 2.23%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

When you look at individual holdings, Apple Inc (AAPL) accounts for about 2.66% of the fund's total assets, followed by Microsoft Corp (MSFT) and Amazon Com Inc (AMZN).

CRBN's top 10 holdings account for about 12.19% of its total assets under management.

Performance and Risk

So far this year, CRBN has gained about 1.42%, and is up roughly 22.36% in the last one year (as of 01/27/2020). During this past 52-week period, the fund has traded between $109.89 and $132.98.

The ETF has a beta of 0.97 and standard deviation of 11.77% for the trailing three-year period, making it a low risk choice in the space. With about 1384 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares MSCI ACWI Low Carbon Target ETF is an excellent option for investors seeking to outperform the World ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

IShares ESG MSCI EM ETF (ESGE) tracks MSCI Emerging Markets ESG Focus Index and the iShares ESG MSCI USA ETF (ESGU) tracks MSCI USA ESG Focus Index. IShares ESG MSCI EM ETF has $2.08 B in assets, iShares ESG MSCI USA ETF has $3.24 B. ESGE has an expense ratio of 0.25% 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 World ETFs.

Bottom Line

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.

Click to get this free report iShares MSCI ACWI Low Carbon Target ETF (CRBN): ETF Research Reports Amazon.com, Inc. (AMZN) : Free Stock Analysis Report Apple Inc. (AAPL) : Free Stock Analysis Report Microsoft Corporation (MSFT) : Free Stock Analysis Report iShares ESG MSCI EM ETF (ESGE): ETF Research Reports iShares ESG MSCI USA ETF (ESGU): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research