We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is FlexShares STOXX US ESG Select Index Fund (ESG) a Strong ETF Right Now?
Read MoreHide Full Article
Making its debut on 07/13/2016, smart beta exchange traded fund FlexShares STOXX US ESG Select Index Fund (ESG - Free Report) provides investors broad exposure to the Style Box - Large Cap Blend 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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
Because the fund has amassed over $204.22 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Blend. ESG is managed by Flexshares. Before fees and expenses, this particular fund seeks to match the performance of the STOXX USA ESG Impact Index.
The STOXX USA ESG Select KPIs Index is an optimized index designed to provide broad market exposure that is tilted toward U.S. companies that score better with respect to a small set of environmental, social and governance characteristics and to provide the potential for attractive risk-adjusted performance relative to the STOXX USA 900 Index.
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.32%.
The fund has a 12-month trailing dividend yield of 1.11%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 25.80% of the portfolio. Financials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Amazon.com Inc Common Stock Usd 0.01 (AMZN - Free Report) accounts for about 5.14% of the fund's total assets, followed by Apple Inc (AAPL - Free Report) and Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) .
ESG's top 10 holdings account for about 34.71% of its total assets under management.
Performance and Risk
The ETF return is roughly 26.91% so far this year and is up about 26.91% in the last one year (as of 12/19/2023). In the past 52-week period, it has traded between $90.43 and $115.26.
The fund has a beta of 1.03 and standard deviation of 17.87% for the trailing three-year period. With about 266 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares STOXX US ESG Select Index Fund is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ - Free Report) tracks ---------------------------------------- and the iShares ESG Aware MSCI USA ETF (ESGU - Free Report) tracks MSCI USA ESG Focus Index. JPMorgan Nasdaq Equity Premium Income ETF has $8.40 billion in assets, iShares ESG Aware MSCI USA ETF has $13.32 billion. JEPQ has an expense ratio of 0.35% 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 - Large Cap Blend.
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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is FlexShares STOXX US ESG Select Index Fund (ESG) a Strong ETF Right Now?
Making its debut on 07/13/2016, smart beta exchange traded fund FlexShares STOXX US ESG Select Index Fund (ESG - Free Report) provides investors broad exposure to the Style Box - Large Cap Blend 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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
Because the fund has amassed over $204.22 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Blend. ESG is managed by Flexshares. Before fees and expenses, this particular fund seeks to match the performance of the STOXX USA ESG Impact Index.
The STOXX USA ESG Select KPIs Index is an optimized index designed to provide broad market exposure that is tilted toward U.S. companies that score better with respect to a small set of environmental, social and governance characteristics and to provide the potential for attractive risk-adjusted performance relative to the STOXX USA 900 Index.
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.32%.
The fund has a 12-month trailing dividend yield of 1.11%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 25.80% of the portfolio. Financials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Amazon.com Inc Common Stock Usd 0.01 (AMZN - Free Report) accounts for about 5.14% of the fund's total assets, followed by Apple Inc (AAPL - Free Report) and Microsoft Corp Common Stock Usd 0.00000625 (MSFT - Free Report) .
ESG's top 10 holdings account for about 34.71% of its total assets under management.
Performance and Risk
The ETF return is roughly 26.91% so far this year and is up about 26.91% in the last one year (as of 12/19/2023). In the past 52-week period, it has traded between $90.43 and $115.26.
The fund has a beta of 1.03 and standard deviation of 17.87% for the trailing three-year period. With about 266 holdings, it effectively diversifies company-specific risk.
Alternatives
FlexShares STOXX US ESG Select Index Fund is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ - Free Report) tracks ---------------------------------------- and the iShares ESG Aware MSCI USA ETF (ESGU - Free Report) tracks MSCI USA ESG Focus Index. JPMorgan Nasdaq Equity Premium Income ETF has $8.40 billion in assets, iShares ESG Aware MSCI USA ETF has $13.32 billion. JEPQ has an expense ratio of 0.35% 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 - Large Cap Blend.
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.