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Is Nuveen ESG LargeCap Value ETF (NULV) a Strong ETF Right Now?

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Making its debut on 12/13/2016, smart beta exchange traded fund Nuveen ESG LargeCap Value ETF (NULV - Free Report) provides investors broad exposure to the Style Box - Large Cap Value 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.

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.

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.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

NULV is managed by Nuveen, and this fund has amassed over $1.38 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. NULV, before fees and expenses, seeks to match the performance of the TIAA ESG USA Large-Cap Value Index.

The TIAA ESG USA Large-Cap Value Index comprises of equity securities issued by large capitalization companies listed on US exchanges. It uses a rules-based methodology that seeks to provide investment exposure generally replicating large-cap value benchmarks through a portfolio of securities adhering to predetermined ESG, controversial business involvement & 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.

Operating expenses on an annual basis are 0.25% for this ETF, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 5.08%.

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.

NULV's heaviest allocation is in the Healthcare sector, which is about 18.10% of the portfolio. Its Financials and Information Technology round out the top three.

Taking into account individual holdings, Procter & Gamble Co/the (PG - Free Report) accounts for about 3.04% of the fund's total assets, followed by Jpmorgan Chase & Co (JPM - Free Report) and Coca-Cola Co/the (KO - Free Report) .

Its top 10 holdings account for approximately 23.34% of NULV's total assets under management.

Performance and Risk

So far this year, NULV has lost about -11.03%, and is down about -3.48% in the last one year (as of 05/20/2022). During this past 52-week period, the fund has traded between $34.62 and $39.88.

The ETF has a beta of 0.93 and standard deviation of 22.93% for the trailing three-year period. With about 110 holdings, it effectively diversifies company-specific risk.

Alternatives

Nuveen ESG LargeCap Value ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value 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 $6.91 billion in assets, iShares ESG Aware MSCI USA ETF has $22.31 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 Value.

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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