A smart beta exchange traded fund, the Nuveen ESG MidCap Value ETF (NUMV) debuted on 12/13/2016, and offers broad exposure to the Style Box - Mid Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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.
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
The fund is sponsored by Nuveen. It has amassed assets over $302.49 million, making it one of the average sized ETFs in the Style Box - Mid Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the TIAA ESG USA Mid-Cap Value Index.
The TIAA ESG USA Mid-Cap Value Index comprises of equity securities issued by mid- capitalization companies listed on US exchanges. It uses a rules-based methodology that seeks to provide investment exposure that generally replicates mid-cap value benchmarks through a portfolio of securities that adhere to predetermined ESG, controversial business involvement and low-carbon screening criteria.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for NUMV are 0.30%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 7.15%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
NUMV's heaviest allocation is in the Financials sector, which is about 21.20% of the portfolio. Its Real Estate and Industrials round out the top three.
When you look at individual holdings, Svb Financial Group (SIVB) accounts for about 2.40% of the fund's total assets, followed by Carrier Global Corp (CARR) and Arthur J Gallagher & Co (AJG).
NUMV's top 10 holdings account for about 20.63% of its total assets under management.
Performance and Risk
The ETF has lost about -7.62% and it's up approximately 8.38% so far this year and in the past one year (as of 03/09/2022), respectively. NUMV has traded between $33.67 and $39.58 during this last 52-week period.
NUMV has a beta of 1.09 and standard deviation of 26.45% for the trailing three-year period. With about 86 holdings, it effectively diversifies company-specific risk.
Alternatives
Nuveen ESG MidCap Value ETF is an excellent option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares ESG Aware MSCI EAFE ETF (ESGD) tracks MSCI EAFE ESG Focus Index and the iShares ESG Aware MSCI USA ETF (ESGU) tracks MSCI USA ESG Focus Index. IShares ESG Aware MSCI EAFE ETF has $6.70 billion in assets, iShares ESG Aware MSCI USA ETF has $22.59 billion. ESGD has an expense ratio of 0.20% 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 Style Box - Mid Cap Value.
Bottom Line
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Nuveen ESG MidCap Value ETF (NUMV): ETF Research Reports
Arthur J. Gallagher & Co. (AJG): Free Stock Analysis Report
SVB Financial Group (SIVB): Free Stock Analysis Report
iShares ESG Aware MSCI EAFE ETF (ESGD): ETF Research Reports
iShares ESG Aware MSCI USA ETF (ESGU): ETF Research Reports
Carrier Global Corporation (CARR): Free Stock Analysis Report
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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.
