Is Nuveen ESG Emerging Markets Equity ETF (NUEM) a Strong ETF Right Now?
The Nuveen ESG Emerging Markets Equity ETF (NUEM) made its debut on 06/07/2017, and is a smart beta exchange traded fund that provides broad exposure to the Broad Developed Market ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Nuveen. It has amassed assets over $240.13 million, making it one of the average sized ETFs in the Broad Developed Market ETFs. NUEM, before fees and expenses, seeks to match the performance of the TIAA ESG Emerging Markets Equity Index.
The TIAA ESG Emerging Markets Equity Index uses a rules-based methodology to arrive at a diversified portfolio of equity securities issued by companies located in countries with emerging markets that adhere to predetermined ESG, controversial business involvement and low-carbon criteria.
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 0.36% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.71%.
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, Taiwan Semiconductor Man /twd/ accounts for about 7.87% of the fund's total assets, followed by Alibaba Group Holding Lt /hkd/ and China Construction Bank- /hkd/.
Its top 10 holdings account for approximately 24.68% of NUEM's total assets under management.
Performance and Risk
So far this year, NUEM has added about 11.05%, and is up roughly 7.94% in the last one year (as of 07/25/2023). During this past 52-week period, the fund has traded between $22.51 and $28.78.
The ETF has a beta of 0.73 and standard deviation of 19.53% for the trailing three-year period. With about 237 holdings, it effectively diversifies company-specific risk.
Alternatives
Nuveen ESG Emerging Markets Equity ETF is a reasonable option for investors seeking to outperform the Broad Developed Market ETFs 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 $15 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 Broad Developed Market 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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Nuveen ESG Emerging Markets Equity ETF (NUEM): ETF Research Reports
iShares ESG Aware MSCI EAFE ETF (ESGD): ETF Research Reports
iShares ESG Aware MSCI USA ETF (ESGU): ETF Research Reports
