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?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
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.
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.
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
CRBN is managed by Blackrock, and this fund has amassed over $416.99 M, which makes it one of the larger ETFs in the World ETFs. This particular fund 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
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 2.23%.
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.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 1.89% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Amazon Com Inc (AMZN - Free Report) .
Its top 10 holdings account for approximately 10.7% of CRBN's total assets under management.
Performance and Risk
Year-to-date, the iShares MSCI ACWI Low Carbon Target ETF return is roughly 12.43% so far, and is down about -1.55% over the last 12 months (as of 03/14/2019). CRBN has traded between $99 and $120.83 in this past 52-week period.
The fund has a beta of 0.97 and standard deviation of 11.96% for the trailing three-year period, which makes CRBN a low risk choice in this particular space. With about 1305 holdings, it effectively diversifies company-specific risk.
IShares MSCI ACWI Low Carbon Target ETF is an excellent option for investors seeking to outperform the World ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $915.49 M in assets, iShares MSCI KLD 400 Social ETF has $1.32 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.