Is Nuveen ESG Large-Cap Growth ETF (NULG) a Strong ETF Right Now?
Launched on 12/13/2016, the Nuveen ESG Large-Cap Growth ETF (NULG) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Growth 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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
NULG is managed by Nuveen, and this fund has amassed over $1.04 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Growth. NULG 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for NULG are 0.26%, which makes it on par with most peer products in the space.
NULG's 12-month trailing dividend yield is 0.33%.
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.
NULG's heaviest allocation is in the Information Technology sector, which is about 39.30% of the portfolio. Its Consumer Discretionary and Healthcare round out the top three.
Taking into account individual holdings, Microsoft Corp (MSFT) accounts for about 12.05% of the fund's total assets, followed by Nvidia Corp (NVDA) and Tesla Inc (TSLA).
NULG's top 10 holdings account for about 39.66% of its total assets under management.
Performance and Risk
Year-to-date, the Nuveen ESG Large-Cap Growth ETF has added roughly 20.11% so far, and is up about 20.31% over the last 12 months (as of 10/26/2023). NULG has traded between $46.83 and $65.15 in this past 52-week period.
NULG has a beta of 1.12 and standard deviation of 22.74% 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 $6.74 billion in assets, iShares ESG Aware MSCI USA ETF has $11.79 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
