Is Nuveen ESG International Developed Markets Equity ETF (NUDM) a Strong ETF Right Now?
Making its debut on 06/07/2017, smart beta exchange traded fund Nuveen ESG International Developed Markets Equity ETF (NUDM) provides investors broad exposure to the World 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by Nuveen, NUDM has amassed assets over $349.61 million, making it one of the average sized ETFs in the World ETFs. This particular fund, before fees and expenses, seeks to match the performance of the TIAA ESG International Developed Markets Equity Index.
The TIAA ESG International Developed Markets Equity Index uses a rules-based methodology to arrive at a diversified portfolio of equity securities issued by companies located in countries with developed markets, excluding the U.S. and Canada, 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.
Annual operating expenses for this ETF are 0.31%, making it on par with most peer products in the space.
NUDM's 12-month trailing dividend yield is 1.95%.
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.
Looking at individual holdings, Nestle Sa-Reg /chf/ accounts for about 3.37% of total assets, followed by Asml Holding Nv /eur/ and Novo Nordisk A/s-B /dkk/.
The top 10 holdings account for about 19.86% of total assets under management.
Performance and Risk
The ETF has gained about 1.28% and it's up approximately 12.40% so far this year and in the past one year (as of 10/31/2023), respectively. NUDM has traded between $23.18 and $29.66 during this last 52-week period.
The fund has a beta of 0.87 and standard deviation of 17.15% for the trailing three-year period. With about 161 holdings, it effectively diversifies company-specific risk.
Alternatives
Nuveen ESG International Developed Markets Equity 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 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 $6.75 billion in assets, iShares ESG Aware MSCI USA ETF has $11.72 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 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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Nuveen ESG International Developed Markets Equity ETF (NUDM): ETF Research Reports
iShares ESG Aware MSCI EAFE ETF (ESGD): ETF Research Reports
iShares ESG Aware MSCI USA ETF (ESGU): ETF Research Reports
