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ESG ETF Arena Gets A Slew Of New Entrants

December 15, 2016 1:27 pm
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ESG ETF Arena Gets A Slew Of New Entrants

The landscape of environmental, social and governance (ESG) exchange-traded funds continues growing, and one ETF issuer contributed to that growth in a big way Wednesday. Nuveen expanded its NuShares ETF suite in significant fashion with the debuts of five ESG ETFs.

In September, Nuveen, a unit of TIAA Global Asset Management, made its long-awaited reentry into the exchange-traded funds business with the launch of the NuShares Enhanced Yield US Aggregate Bond ETF (BATS: NUAG) (NYSE: NUAG).

Large- And Mid-Cap Strategies

The NuShares ESG Large-Cap Growth ETF (BATS: NULG), one of the the new NuShares ETFs to debut Wednesday, tracks the TIAA ESG USA Large-Cap Growth Index. That index “is primarily composed of equity securities issued by large capitalization companies listed on U.S. exchanges. The Index uses a rules-based methodology that seeks to provide investment exposure that generally replicates that of traditional large-cap growth benchmarks through a portfolio of securities that adhere to predetermined ESG, controversial business involvement and low-carbon screening criteria,” according to Nuveen.

NULG allocates about half its combined weight to technology and consumer discretionary stocks. The NuShares ESG Large-Cap Value ETF (BATS: NULV) is the value counterpart to NULG. NULV follows the TIAA ESG USA Large-Cap Value Index, which uses the same methodology as the index tracked by NULG.

NULV allocates over a third of its weight to financial services and energy stocks, two sectors frequently appearing atop a plethora of value ETFs. The NuShares ESG Mid-Cap Growth ETF (BATS: NUMG) is the mid-cap answer to the NULG. NUMG's underlying index, the TIAA ESG USA Mid-Cap Growth Index, uses the same methodology as the benchmarks followed by NULG and NULV.

Small-Cap Strategies

Nuveen also introduced two ESG small-cap strategies. The NuShares ESG Mid-Cap Value ETF (BATS: NUMV) is, as its name implies, a play on small-cap value stocks, while the NuShares ESG Small-Cap ETF (BATS: NUSC) is a broader small-cap ETF.

NULG and NULG charge 0.35 percent per year, or $35 on a $10,000 investment, while the new NuShares mid- and small-cap ETFs carry annual expense ratios of 0.4 percent.

ESG Investing, In A Nutshell

“ESG investing has been a bright spot for the asset management industry, representing a significant growth opportunity as investors increasingly seek to align their investments with their values,” said Nuveen in a statement. “In a recent TIAA Global Asset Management survey of over 1,000 high net worth U.S. investors, 89 percent said they would like to invest responsibly as long as they could achieve the same or better investment returns, and nearly three quarters of respondents said they would be more likely to work with advisors who were able to offer them competitive investment options that also have a positive impact on society.”