Is iShares MSCI ACWI Low Carbon Target ETF (CRBN) a Strong ETF Right Now?
A smart beta exchange traded fund, the iShares MSCI ACWI Low Carbon Target ETF (CRBN) 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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Blackrock, CRBN has amassed assets over $431.37 million, making 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
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.
Operating expenses on an annual basis are 0.20% for CRBN, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.02%.
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.
Looking at individual holdings, Apple Inc (AAPL) accounts for about 3.33% of total assets, followed by Microsoft Corp (MSFT) and Amazon Com Inc (AMZN).
Its top 10 holdings account for approximately 15.25% of CRBN's total assets under management.
Performance and Risk
The ETF has lost about -1.18% so far this year and was up about 6.18% in the last one year (as of 07/24/2020). In the past 52-week period, it has traded between $89.44 and $133.75.
The fund has a beta of 0.96 and standard deviation of 20.39% for the trailing three-year period, which makes CRBN a low risk choice in this particular space. With about 1425 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 ESG MSCI EM ETF (ESGE) tracks MSCI Emerging Markets ESG Focus Index and the iShares ESG MSCI USA ETF (ESGU) tracks MSCI USA ESG Focus Index. IShares ESG MSCI EM ETF has $3.43 billion in assets, iShares ESG MSCI USA ETF has $7.77 billion. ESGE has an expense ratio of 0.25% and ESGU charges 0.15%.
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.
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iShares MSCI ACWI Low Carbon Target ETF (CRBN): ETF Research Reports
Microsoft Corporation (MSFT): Free Stock Analysis Report
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
Apple Inc. (AAPL): Free Stock Analysis Report
iShares ESG MSCI EM ETF (ESGE): ETF Research Reports
iShares ESG MSCI USA ETF (ESGU): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.