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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?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Nuveen. It has amassed assets over $913 million, making it one of the larger ETFs in the Style Box - Small Cap Growth. Before fees and expenses, NUSC 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.30% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 17.20% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Information Technology round out the top three.
Taking into account individual holdings, First Horizon Corporation (FHN - Free Report) accounts for about 1.07% of the fund's total assets, followed by Darling Ingredients Inc (DAR - Free Report) and Toro Co (TTC - Free Report) .
Its top 10 holdings account for approximately 9.32% of NUSC's total assets under management.
Performance and Risk
Year-to-date, the Nuveen ESG SmallCap ETF has lost about -17.48% so far, and is down about -13.86% over the last 12 months (as of 09/20/2022). 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 29.55% for the trailing three-year period. With about 570 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 $6.29 billion in assets, iShares ESG Aware MSCI USA ETF has $21.94 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?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Nuveen. It has amassed assets over $913 million, making it one of the larger ETFs in the Style Box - Small Cap Growth. Before fees and expenses, NUSC 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.30% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 17.20% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Information Technology round out the top three.
Taking into account individual holdings, First Horizon Corporation (FHN - Free Report) accounts for about 1.07% of the fund's total assets, followed by Darling Ingredients Inc (DAR - Free Report) and Toro Co (TTC - Free Report) .
Its top 10 holdings account for approximately 9.32% of NUSC's total assets under management.
Performance and Risk
Year-to-date, the Nuveen ESG SmallCap ETF has lost about -17.48% so far, and is down about -13.86% over the last 12 months (as of 09/20/2022). 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 29.55% for the trailing three-year period. With about 570 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 $6.29 billion in assets, iShares ESG Aware MSCI USA ETF has $21.94 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.