The iShares MSCI ACWI Low Carbon Target ETF (CRBN Quick QuoteCRBN - Free Report) made its debut on 12/08/2014, and is a smart beta exchange traded fund that provides broad exposure to the World ETFs 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.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

Because the fund has amassed over $830.76 million, this makes it one of the larger ETFs in the World ETFs. CRBN is managed by Blackrock. CRBN seeks to match the performance of the MSCI ACWI Low Carbon Target Index before fees and expenses.

The MSCI ACWI Low Carbon Target Index is designed to address two dimensions of carbon exposure ? carbon emissions and potential carbon emissions from fossil fuel reserves.

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.

With one of the least expensive products in the space, this ETF has annual operating expenses of 0.20%.

CRBN's 12-month trailing dividend yield is 2.06%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

When you look at individual holdings, Apple Inc (AAPL Quick QuoteAAPL - Free Report) accounts for about 4.60% of the fund's total assets, followed by Microsoft Corp (MSFT Quick QuoteMSFT - Free Report) and Amazon Com Inc (AMZN Quick QuoteAMZN - Free Report) .

Performance and Risk

The ETF has lost about -19.19% and is down about -18.29% so far this year and in the past one year (as of 12/26/2022), respectively. CRBN has traded between $126.30 and $174.82 during this last 52-week period.

CRBN has a beta of 0.94 and standard deviation of 23.52% for the trailing three-year period, which makes the fund a low risk choice in the space. With about 1298 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares MSCI ACWI Low Carbon Target ETF is a reasonable option for investors seeking to outperform the World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

IShares ESG Aware MSCI EAFE ETF (ESGD Quick QuoteESGD - Free Report) tracks MSCI EAFE ESG Focus Index and the iShares ESG Aware MSCI USA ETF (ESGU Quick QuoteESGU - Free Report) tracks MSCI USA ESG Focus Index. IShares ESG Aware MSCI EAFE ETF has $6.73 billion in assets, iShares ESG Aware MSCI USA ETF has $19.63 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 World ETFs.

Bottom Line

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