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Is iShares MSCI ACWI Low Carbon Target ETF (CRBN) a Strong ETF Right Now?

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Making its debut on 12/08/2014, smart beta exchange traded fund iShares MSCI ACWI Low Carbon Target ETF (CRBN - Free Report) provides investors broad exposure to the World ETFs category of the market.

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.

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.

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

The fund is managed by Blackrock, and has been able to amass over $854.53 million, which makes it one of the larger ETFs in the World ETFs. This particular fund, before fees and expenses, seeks to match the performance of the MSCI ACWI Low Carbon Target Index.

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

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

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

The fund has a 12-month trailing dividend yield of 1.76%.

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.

When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 4.50% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Amazon Com Inc (AMZN - Free Report) .

CRBN's top 10 holdings account for about 15.89% of its total assets under management.

Performance and Risk

Year-to-date, the iShares MSCI ACWI Low Carbon Target ETF has added about 12.54% so far, and is up about 14.19% over the last 12 months (as of 07/07/2023). CRBN has traded between $126.30 and $156.70 in this past 52-week period.

The fund has a beta of 0.95 and standard deviation of 17.34% for the trailing three-year period, which makes CRBN a low risk choice in this particular space. With about 1350 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 - 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 $7.28 billion in assets, iShares ESG Aware MSCI USA ETF has $14.55 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

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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