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

Sweta Killa
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The iShares MSCI ACWI Low Carbon Target ETF (CRBN) made its debut on 12/08/2014, and is a smart beta exchange traded fund that provides 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.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

The fund is managed by Blackrock. CRBN has been able to amass assets over $487.27 M, making it one of the larger ETFs in the World ETFs. CRBN seeks to match the performance of the MSCI ACWI Low Carbon Target Index before fees and expenses.

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.

Operating expenses on an annual basis are 0.20% for CRBN, making it one of the least expensive products in the space.

It's 12-month trailing dividend yield comes in at 2.47%.

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.

Taking into account individual holdings, Apple Inc (AAPL) accounts for about 1.84% of the fund's total assets, followed by Microsoft Corp (MSFT) and Amazon Com Inc (AMZN).

CRBN's top 10 holdings account for about 11.07% of its total assets under management.

Performance and Risk

The ETF has added about 1.78% so far this year and is down about -10.06% in the last one year (as of 01/07/2019). In the past 52-week period, it has traded between $99 and $125.90.

CRBN has a beta of 0.96 and standard deviation of 12.52% for the trailing three-year period, which makes the fund a low risk choice in the space. With about 1306 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares MSCI ACWI Low Carbon Target ETF is a reasonable option for investors seeking to outperform the World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

IShares MSCI USA ESG Select ETF (SUSA) tracks MSCI USA ESG Select Index and the iShares MSCI KLD 400 Social ETF (DSI) tracks MSCI KLD 400 Social Index. IShares MSCI USA ESG Select ETF has $787.51 M in assets, iShares MSCI KLD 400 Social ETF has $1.22 B. SUSA has an expense ratio of 0.25% and DSI charges 0.25%.

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.


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ISHARS-M L CRBN (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
 
ISHARS-KLD 400 (DSI): ETF Research Reports
 
ISHARS-USA ESG (SUSA): ETF Research Reports
 
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