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Is iShares ESG Aware MSCI USA ETF (ESGU) a Strong ETF Right Now?
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A smart beta exchange traded fund, the iShares ESG Aware MSCI USA ETF (ESGU - Free Report) debuted on 12/01/2016, and offers broad exposure to the Style Box - All Cap Growth 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.
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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
ESGU is managed by Blackrock, and this fund has amassed over $12.37 billion, which makes it one of the largest ETFs in the Style Box - All Cap Growth. ESGU, before fees and expenses, seeks to match the performance of the MSCI USA ESG Focus Index.
The MSCI USA Extended ESG Focus Index comprises of U.S. companies that have positive environmental, social and governance characteristics while exhibiting risk and return characteristics similar to those of the parent index.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.15% for ESGU, making it one of the least expensive products in the space.
ESGU's 12-month trailing dividend yield is 1.27%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For ESGU, it has heaviest allocation in the Information Technology sector --about 30.60% of the portfolio --while Healthcare and Financials round out the top three.
When you look at individual holdings, Microsoft Corp (MSFT - Free Report) accounts for about 6.79% of the fund's total assets, followed by Apple Inc (AAPL - Free Report) and Nvidia Corp (NVDA - Free Report) .
Its top 10 holdings account for approximately 30.56% of ESGU's total assets under management.
Performance and Risk
Year-to-date, the iShares ESG Aware MSCI USA ETF return is roughly 7.12% so far, and was up about 23.93% over the last 12 months (as of 04/30/2024). ESGU has traded between $89.15 and $114.96 in this past 52-week period.
The ETF has a beta of 1.03 and standard deviation of 17.73% for the trailing three-year period. With about 288 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares ESG Aware MSCI USA ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard ESG U.S. Stock ETF (ESGV - Free Report) tracks FTSE US ALL CAP CHOICE INDEX and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ - Free Report) tracks ----------------------------------------. Vanguard ESG U.S. Stock ETF has $8.16 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $12.33 billion. ESGV has an expense ratio of 0.09% 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 Style Box - All Cap Growth.
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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Is iShares ESG Aware MSCI USA ETF (ESGU) a Strong ETF Right Now?
A smart beta exchange traded fund, the iShares ESG Aware MSCI USA ETF (ESGU - Free Report) debuted on 12/01/2016, and offers broad exposure to the Style Box - All Cap Growth 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.
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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
ESGU is managed by Blackrock, and this fund has amassed over $12.37 billion, which makes it one of the largest ETFs in the Style Box - All Cap Growth. ESGU, before fees and expenses, seeks to match the performance of the MSCI USA ESG Focus Index.
The MSCI USA Extended ESG Focus Index comprises of U.S. companies that have positive environmental, social and governance characteristics while exhibiting risk and return characteristics similar to those of the parent index.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.15% for ESGU, making it one of the least expensive products in the space.
ESGU's 12-month trailing dividend yield is 1.27%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For ESGU, it has heaviest allocation in the Information Technology sector --about 30.60% of the portfolio --while Healthcare and Financials round out the top three.
When you look at individual holdings, Microsoft Corp (MSFT - Free Report) accounts for about 6.79% of the fund's total assets, followed by Apple Inc (AAPL - Free Report) and Nvidia Corp (NVDA - Free Report) .
Its top 10 holdings account for approximately 30.56% of ESGU's total assets under management.
Performance and Risk
Year-to-date, the iShares ESG Aware MSCI USA ETF return is roughly 7.12% so far, and was up about 23.93% over the last 12 months (as of 04/30/2024). ESGU has traded between $89.15 and $114.96 in this past 52-week period.
The ETF has a beta of 1.03 and standard deviation of 17.73% for the trailing three-year period. With about 288 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares ESG Aware MSCI USA ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard ESG U.S. Stock ETF (ESGV - Free Report) tracks FTSE US ALL CAP CHOICE INDEX and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ - Free Report) tracks ----------------------------------------. Vanguard ESG U.S. Stock ETF has $8.16 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $12.33 billion. ESGV has an expense ratio of 0.09% 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 Style Box - All Cap Growth.
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.