Is Nuveen ESG International Developed Markets Equity ETF (NUDM) a Strong ETF Right Now?
The Nuveen ESG International Developed Markets Equity ETF (NUDM) was launched on 06/07/2017, and is a smart beta exchange traded fund designed to offer broad exposure to the World ETFs 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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
NUDM is managed by Nuveen, and this fund has amassed over $357.32 million, which makes 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 NUDM are 0.31%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.75%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Nestle Sa-Reg /chf/ accounts for about 3.33% of the fund's total assets, followed by Asml Holding Nv /eur/ and Siemens Ag-Reg /eur/ (SIE).
The top 10 holdings account for about 19.64% of total assets under management.
Performance and Risk
The ETF return is roughly 12.60% so far this year and was up about 14.09% in the last one year (as of 06/13/2023). In the past 52-week period, it has traded between $22.23 and $29.10.
The fund has a beta of 0.87 and standard deviation of 17.48% for the trailing three-year period. With about 151 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 $7.35 billion in assets, iShares ESG Aware MSCI USA ETF has $14.06 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
