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Is Nuveen ESG MidCap Growth ETF (NUMG) a Strong ETF Right Now?

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The Nuveen ESG MidCap Growth ETF (NUMG - Free Report) was launched on 12/13/2016, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Mid Cap Growth category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

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.

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 $355.15 million, this makes it one of the average sized ETFs in the Style Box - Mid Cap Growth. NUMG is managed by Nuveen. Before fees and expenses, NUMG seeks to match the performance of the TIAA ESG USA Mid-Cap Growth Index.

The TIAA ESG USA Mid-Cap Growth Index comprises of equity securities issued by mid- capitalization companies listed on US 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.

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 NUMG are 0.30%, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 14.93%.

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.

Representing 37.20% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Consumer Discretionary round out the top three.

When you look at individual holdings, Marvell Technology Inc (MRVL - Free Report) accounts for about 3.64% of the fund's total assets, followed by Cadence Design Sys Inc (CDNS - Free Report) and Match Group Inc (MTCH - Free Report) .

Its top 10 holdings account for approximately 27.84% of NUMG's total assets under management.

Performance and Risk

The ETF has lost about -13.64% so far this year and is down about -3.31% in the last one year (as of 03/17/2022). In the past 52-week period, it has traded between $39.39 and $59.46.

The ETF has a beta of 1.10 and standard deviation of 24.41% for the trailing three-year period. With about 59 holdings, it effectively diversifies company-specific risk.

Alternatives

Nuveen ESG MidCap Growth ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.

IShares ESG Aware MSCI EAFE ETF (ESGD - Free Report) tracks MSCI EAFE ESG Focus Index and the iShares ESG Aware MSCI USA ETF (ESGU - Free Report) tracks MSCI USA ESG Focus Index. IShares ESG Aware MSCI EAFE ETF has $7.24 billion in assets, iShares ESG Aware MSCI USA ETF has $23.76 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 - Mid 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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