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Is Nuveen ESG SmallCap ETF (NUSC) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Small Cap Growth category of the market, the Nuveen ESG SmallCap ETF (NUSC - Free Report) is a smart beta exchange traded fund launched on 12/13/2016.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
NUSC is managed by Nuveen, and this fund has amassed over $922.43 million, which makes it one of the larger ETFs in the Style Box - Small Cap Growth. This particular fund, before fees and expenses, seeks to match the performance of the TIAA ESG Small-Cap Index.
The TIAA ESG USA Small-Cap Index comprises of equity securities issued by small-capitalization companies listed on US exchanges.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.30% for NUSC, making it on par with most peer products in the space.
NUSC's 12-month trailing dividend yield is 8.44%.
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.
For NUSC, it has heaviest allocation in the Industrials sector --about 18.70% of the portfolio --while Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, First Horizon Corporation (FHN - Free Report) accounts for about 1.15% of total assets, followed by Darling Ingredients Inc (DAR - Free Report) and Concentrix Corp (CNXC - Free Report) .
Its top 10 holdings account for approximately 8.49% of NUSC's total assets under management.
Performance and Risk
Year-to-date, the Nuveen ESG SmallCap ETF has lost about -17.26% so far, and is down about -12.32% over the last 12 months (as of 07/21/2022). NUSC has traded between $31.50 and $47.48 in this past 52-week period.
The ETF has a beta of 1.13 and standard deviation of 29.40% for the trailing three-year period. With about 590 holdings, it effectively diversifies company-specific risk.
Alternatives
Nuveen ESG SmallCap ETF is a reasonable option for investors seeking to outperform the Style Box - Small 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 $6.51 billion in assets, iShares ESG Aware MSCI USA ETF has $22.21 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 - Small 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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Is Nuveen ESG SmallCap ETF (NUSC) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - Small Cap Growth category of the market, the Nuveen ESG SmallCap ETF (NUSC - Free Report) is a smart beta exchange traded fund launched on 12/13/2016.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
NUSC is managed by Nuveen, and this fund has amassed over $922.43 million, which makes it one of the larger ETFs in the Style Box - Small Cap Growth. This particular fund, before fees and expenses, seeks to match the performance of the TIAA ESG Small-Cap Index.
The TIAA ESG USA Small-Cap Index comprises of equity securities issued by small-capitalization companies listed on US exchanges.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.30% for NUSC, making it on par with most peer products in the space.
NUSC's 12-month trailing dividend yield is 8.44%.
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.
For NUSC, it has heaviest allocation in the Industrials sector --about 18.70% of the portfolio --while Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, First Horizon Corporation (FHN - Free Report) accounts for about 1.15% of total assets, followed by Darling Ingredients Inc (DAR - Free Report) and Concentrix Corp (CNXC - Free Report) .
Its top 10 holdings account for approximately 8.49% of NUSC's total assets under management.
Performance and Risk
Year-to-date, the Nuveen ESG SmallCap ETF has lost about -17.26% so far, and is down about -12.32% over the last 12 months (as of 07/21/2022). NUSC has traded between $31.50 and $47.48 in this past 52-week period.
The ETF has a beta of 1.13 and standard deviation of 29.40% for the trailing three-year period. With about 590 holdings, it effectively diversifies company-specific risk.
Alternatives
Nuveen ESG SmallCap ETF is a reasonable option for investors seeking to outperform the Style Box - Small 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 $6.51 billion in assets, iShares ESG Aware MSCI USA ETF has $22.21 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 - Small 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.