Is Nuveen ESG International Developed Markets Equity ETF (NUDM) a Strong ETF Right Now?

Launched on 06/07/2017, the Nuveen ESG International Developed Markets Equity ETF (NUDM) is a smart beta exchange traded fund offering broad exposure to the Broad Developed World ETFs category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well 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.

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

The fund is sponsored by Nuveen. It has amassed assets over $424.02 million, making it one of the average sized ETFs in the Broad Developed World ETFs. This particular fund seeks to match the performance of the TIAA ESG International Developed Markets Equity Index before fees and expenses.

The TIAA ESG International Developed Markets Equity Index uses a rules-based methodology to arrive at a diversified portfolio of equity securities issued by companies located in countries with developed markets, excluding the U.S. and Canada, that adhere to predetermined ESG, controversial business involvement and low-carbon criteria.

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 0.31% for this ETF, which makes it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.98%.

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, Asml Holding Nv /eur/ accounts for about 3.69% of total assets, followed by Novo Nordisk A/s-B /dkk/ and Siemens Ag-Reg /eur/ (SIE).

The top 10 holdings account for about 21.07% of total assets under management.

Performance and Risk

The ETF has added about 5.20% and is up about 9.61% so far this year and in the past one year (as of 05/09/2024), respectively. NUDM has traded between $25.86 and $31.15 during this last 52-week period.

The fund has a beta of 0.89 and standard deviation of 16.65% for the trailing three-year period. With about 157 holdings, it effectively diversifies company-specific risk.

Alternatives

Nuveen ESG International Developed Markets Equity ETF is a reasonable option for investors seeking to outperform the Broad Developed World 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 $12.70 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $12.82 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 Developed World 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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Nuveen ESG International Developed Markets Equity ETF (NUDM): 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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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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