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Is Nuveen ESG Large-Cap 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 Large-Cap 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?

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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

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.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

The fund is managed by Nuveen. NULV has been able to amass assets over $1.50 billion, making it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund 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

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 0.26% for NULV, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.58%.

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.

This ETF has heaviest allocation in the Financials sector - about 20% of the portfolio. Healthcare and Information Technology round out the top three.

When you look at individual holdings, Unitedhealth Group Inc (UNH - Free Report) accounts for about 2.66% of the fund's total assets, followed by Coca-Cola Co/the (KO - Free Report) and Pepsico Inc (PEP - Free Report) .

Its top 10 holdings account for approximately 21.72% of NULV's total assets under management.

Performance and Risk

The ETF has lost about -0.95% and is up about 4.70% so far this year and in the past one year (as of 01/19/2024), respectively. NULV has traded between $32.04 and $36.15 during this last 52-week period.

The ETF has a beta of 0.93 and standard deviation of 15.19% for the trailing three-year period. With about 96 holdings, it effectively diversifies company-specific risk.

Alternatives

Nuveen ESG Large-Cap Value ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.

JPMorgan Nasdaq Equity Premium Income ETF (JEPQ - Free Report) tracks ---------------------------------------- and the iShares ESG Aware MSCI USA ETF (ESGU - Free Report) tracks MSCI USA ESG Focus Index. JPMorgan Nasdaq Equity Premium Income ETF has $8.79 billion in assets, iShares ESG Aware MSCI USA ETF has $13.46 billion. JEPQ has an expense ratio of 0.35% 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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