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The Zacks Analyst Blog Highlights: TAN, PBW, NUMG, NULG and VETS

Zacks Equity Research
Shares of Square (SQ) have climbed over 30% in 2019 to outpace the S&P 500's 17% climb and nearly match fellow fintech power PayPal's (PYPL) jump. With that said, let's see if investors should think about buying Square heading into its first-quarter fiscal 2019 earnings release that is due out after the closing bell on Wednesday, May 1.

For Immediate Release

Chicago, IL – April 23, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Invesco Solar ETF TAN, Invesco WilderHill Clean Energy ETF PBW, Nuveen ESG Mid-Cap Growth ETF NUMG, Nuveen ESG Large-Cap Growth ETF NULG and Pacer Military Times Best Employers ETF VETS.

Here are highlights from last Thursday’s Analyst Blog:

5 ESG ETFs Beating SPY This Year: More Room to Run?

Environmental, social and governance (ESG) investing is a new big thing in the ETF industry. Issuers are increasingly coming up with products. As of October 2018, assets tied to ESG products were about $12 trillion (read: Successful ETF Launches of First Quarter).

That’s marks an increase of 38% from $8.7 trillion in 2016, per etf.com. Total assets invested sustainably in the United States grew to 26% in 2018 from 22% in 2016, according to a Global Sustainable Investing Alliance report.

Investors should note that having entered only in early March, MSCI USA ESG Leaders Equity ETF has amassed about $895.7 million in assets.It marked the biggest launch of any ETF in the past 15 years. Increased client demand is leading asset managers to integrate ESG into their offerings in some way. Leading index providers have been creating investable indices for this category.

The battle of fee cuts among issuers is another thing that is driving investors toward the segment. Price sensitivity among ESG investors has become pretty prominent of late per a Wall Street Journal article. Average fees fell to 0.35% in March from 0.58% in 2014.

Notably, USSG charges only 10 bps in fees, which marked a reduction from the previous-sector low of 12 bps. Other low-cost options are Vanguard ESG U.S. Stock ETF (12 bps) and iShares ESG MSCI USA ETF (15 bps). Notably, the iShares fund debuted in December 2016 with an expense ratio 0.28%, which was cut to 0.15% in August 2017.

Against this backdrop, below we highlight a few ESG ETFs that have gained the most in the past three months. These funds have beaten the SPDR S&P 500 ETF (up 13.2%).

Invesco Solar ETF – Up 21.5%

The underlying MAC Global Solar Energy Index comprises companies in the solar energy industry. It charges 70 bps in fees (read: Top ETF Stories of Q1).

Invesco WilderHill Clean Energy ETF – Up 19.8%

The underlying WilderHill Clean Energy Index is composed of stocks that are publicly traded in the United States and engaged in the business of advancement of cleaner energy and conservation. The fund charges 70 bps in fees (read: Forget Trump Budget, 5 Green ETFs Crushing the Market).

Nuveen ESG Mid-Cap Growth ETF – Up 18.4%

The underlying TIAA ESG USA Mid-Cap Growth Index comprises equity securities issued by mid-capitalization companies listed on U.S. exchanges.It uses a rules-based methodology that provides investment exposure that generally replicates that of mid-cap growth benchmarks through a portfolio of securities that adhere to predetermined ESG, controversial business involvement and low-carbon screening criteria. The fund charges 40 bps in fees (read: ESG ETFs: Making Money While Doing Good).

Nuveen ESG Large-Cap Growth ETF – Up 17.2%

The underlying TIAA ESG USA Large-Cap Growth Index comprises large-cap equity securities and 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. The fund charges 35 bps in fees.

Pacer Military Times Best Employers ETF – Up 16.6%

The underlying Military Times Best for Vets Index comprises U.S. listed stocks of companies that have featured on the Best for Vets List for the last three consecutive years. The fund charges 60 bps in fees.

More Run Ahead?

ESG ETFs make up around 0.54% of ETF assets globally, and only 0.31% of those in the United States as of March, according to ETFGI. In a survey done in late 2018 by Newton, a subsidiary of BNY Mellon, revealed that 55% of 1000 surveyed Americans are still unaware of socially responsible investing.

However, several surveyed people who are now aware of the theme “stated they were moderately, highly or extremely interested in it after learning about it.” This clearly explains that the area is still operating below its full potential and thus has more room for growth.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Invesco WilderHill Clean Energy ETF (PBW): ETF Research Reports
Invesco Solar ETF (TAN): ETF Research Reports
Nuveen ESG Mid-Cap Growth ETF (NUMG): ETF Research Reports
Pacer Military Times Best Employers ETF (VETS): ETF Research Reports
Nuveen ESG Large-Cap Growth ETF (NULG): ETF Research Reports
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