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Is Nuveen ESG Emerging Markets Equity ETF (NUEM) a Strong ETF Right Now?

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Designed to provide broad exposure to the Broad Emerging Market ETFs category of the market, the Nuveen ESG Emerging Markets Equity ETF (NUEM - Free Report) is a smart beta exchange traded fund launched on 06/07/2017.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

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

Managed by Nuveen, NUEM has amassed assets over $299.50 million, making it one of the average sized ETFs in the Broad Emerging Market ETFs. This particular fund seeks to match the performance of the TIAA ESG Emerging Markets Equity Index before fees and expenses.

The Nuveen ESG Emerging Markets Equity Index uses a rules-based methodology to arrive at a diversified portfolio of equity securities issued by companies located in countries with emerging markets that adhere to predetermined ESG, controversial business involvement and low-carbon screen criteria.

Cost & Other Expenses

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

Operating expenses on an annual basis are 0.36% for NUEM, making it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 1.89%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

When you look at individual holdings, Taiwan Semiconductor Manu accounts for about 11.83% of the fund's total assets, followed by Meituan and China Construction Bank C.

The top 10 holdings account for about 28.35% of total assets under management.

Performance and Risk

The ETF has gained about 3.10% so far this year and is up roughly 13.93% in the last one year (as of 02/11/2025). In the past 52-week period, it has traded between $26.13 and $32.11.

The fund has a beta of 0.68 and standard deviation of 20.15% for the trailing three-year period. With about 202 holdings, it effectively diversifies company-specific risk.

Alternatives

Nuveen ESG Emerging Markets Equity ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

IShares ESG Aware MSCI USA ETF (ESGU - Free Report) tracks MSCI USA ESG Focus Index and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ - Free Report) tracks ----------------------------------------. IShares ESG Aware MSCI USA ETF has $14.19 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $23.04 billion. ESGU has an expense ratio of 0.15% and JEPQ charges 0.35%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market 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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