Is Nuveen ESG Large-Cap Growth ETF (NULG) a Strong ETF Right Now?
Making its debut on 12/13/2016, smart beta exchange traded fund Nuveen ESG Large-Cap Growth ETF (NULG) provides investors broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
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.
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.
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
Because the fund has amassed over $1.07 billion, this makes it one of the average sized ETFs in the Style Box - Large Cap Growth. NULG is managed by Nuveen. This particular fund seeks to match the performance of the TIAA ESG USA Large-Cap Growth Index before fees and expenses.
The TIAA ESG USA Large-Cap Growth Index is comprised of equity securities of large capitalization companies listed on US exchanges & meet ESG criteria & exhibit overall growth style characteristics based on long-term forward EPS growth rate, short-term forward EPS growth rate, current internal growth rate, long-term historical EPS growth trend & long-term historical sales per share growth trend.
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 0.26% for NULG, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.32%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 38.70% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Discretionary and Healthcare round out the top three.
When you look at individual holdings, Microsoft Corp (MSFT) accounts for about 12.77% of the fund's total assets, followed by Nvidia Corp (NVDA) and Tesla Inc (TSLA).
Its top 10 holdings account for approximately 38.41% of NULG's total assets under management.
Performance and Risk
The ETF has gained about 25.08% so far this year and was up about 14.24% in the last one year (as of 08/25/2023). In the past 52-week period, it has traded between $45 and $65.15.
The fund has a beta of 1.12 and standard deviation of 23.12% for the trailing three-year period. With about 112 holdings, it effectively diversifies company-specific risk.
Alternatives
Nuveen ESG Large-Cap Growth ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
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 $7.09 billion in assets, iShares ESG Aware MSCI USA ETF has $12.48 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 Style Box - Large Cap Growth.
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 Large-Cap Growth ETF (NULG): ETF Research Reports
Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
iShares ESG Aware MSCI EAFE ETF (ESGD): ETF Research Reports
iShares ESG Aware MSCI USA ETF (ESGU): ETF Research Reports
