A smart beta exchange traded fund, the iShares MSCI ACWI Low Carbon Target ETF (CRBN - Free Report) debuted on 12/08/2014, and offers 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.
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.
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
Managed by Blackrock, CRBN has amassed assets over $379.29 M, making it one of the larger ETFs in the World ETFs. Before fees and expenses, CRBN 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
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 0.20% for CRBN, making it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 2.35%.
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, Microsoft Corp (MSFT - Free Report) accounts for about 1.84% of the fund's total assets, followed by Apple Inc (AAPL - Free Report) and Amazon Com Inc (AMZN - Free Report) .
CRBN's top 10 holdings account for about 10.59% of its total assets under management.
Performance and Risk
Year-to-date, the iShares MSCI ACWI Low Carbon Target ETF return is roughly 6.67% so far, and is down about -10.66% over the last 12 months (as of 01/29/2019). CRBN has traded between $99 and $123.81 in this past 52-week period.
CRBN has a beta of 0.96 and standard deviation of 12.34% for the trailing three-year period, which makes the fund a low risk choice in the space. With about 1302 holdings, it effectively diversifies company-specific risk.
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 MSCI USA ESG Select ETF (SUSA - Free Report) tracks MSCI USA ESG Select Index and the iShares MSCI KLD 400 Social ETF (DSI - Free Report) tracks MSCI KLD 400 Social Index. IShares MSCI USA ESG Select ETF has $837.91 M in assets, iShares MSCI KLD 400 Social ETF has $1.26 B. SUSA has an expense ratio of 0.25% and DSI charges 0.25%.
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.
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.