Designed to provide broad exposure to the Broad Emerging Market ETFs category of the market, the Nuveen ESG Emerging Markets Equity ETF (NUEM) is a smart beta exchange traded fund launched on 06/07/2017.
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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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
The fund is sponsored by Nuveen. It has amassed assets over $293.33 million, making it one of the average sized ETFs in the Broad Emerging Market ETFs. NUEM, before fees and expenses, seeks to match the performance of the TIAA ESG Emerging Markets Equity Index.
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
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.
Annual operating expenses for this ETF are 0.36%, making it on par with most peer products in the space.
NUEM's 12-month trailing dividend yield is 2.09%.
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.
When you look at individual holdings, Taiwan Semiconductor Manu accounts for about 11.16% of the fund's total assets, followed by Meituan and China Construction Bank C.
Its top 10 holdings account for approximately 27.75% of NUEM's total assets under management.
Performance and Risk
So far this year, NUEM has gained about 13.40%, and is up about 19.63% in the last one year (as of 12/11/2024). During this past 52-week period, the fund has traded between $25.32 and $32.11.
The ETF has a beta of 0.70 and standard deviation of 20.24% for the trailing three-year period. With about 219 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) tracks MSCI USA ESG Focus Index and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) tracks ----------------------------------------. IShares ESG Aware MSCI USA ETF has $14.32 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $19.96 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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Get it free >>Nuveen ESG Emerging Markets Equity ETF (NUEM): ETF Research Reports
iShares ESG Aware MSCI USA ETF (ESGU): ETF Research Reports
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ): ETF Research Reports
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