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?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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
CRBN is managed by Blackrock, and this fund has amassed over $451.93 M, which makes it one of the larger ETFs in the World ETFs. Before fees and expenses, this particular fund 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.20% for CRBN, making it one of the least expensive products in the space.
CRBN's 12-month trailing dividend yield is 2.18%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Microsoft Corp (MSFT - Free Report) accounts for about 1.99% of the fund's total assets, followed by Apple Inc (AAPL - Free Report) and Amazon Com Inc (AMZN - Free Report) .
The top 10 holdings account for about 10.79% of total assets under management.
Performance and Risk
Year-to-date, the iShares MSCI ACWI Low Carbon Target ETF has gained about 15.42% so far, and is up about 1.03% over the last 12 months (as of 06/12/2019). CRBN has traded between $99 and $120.95 in this past 52-week period.
The fund has a beta of 0.97 and standard deviation of 11.95% for the trailing three-year period, which makes CRBN a low risk choice in this particular space. With about 1316 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.
Xtrackers MSCI USA ESG Leaders Equity ETF (USSG - Free Report) tracks MSCI USA ESG LEADERS INDEX and the iShares MSCI KLD 400 Social ETF (DSI - Free Report) tracks MSCI KLD 400 Social Index. Xtrackers MSCI USA ESG Leaders Equity ETF has $1.22 B in assets, iShares MSCI KLD 400 Social ETF has $1.41 B. USSG has an expense ratio of 0.10% 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.