Is iShares ESG Aware MSCI USA ETF (ESGU) a Strong ETF Right Now?

Making its debut on 12/01/2016, smart beta exchange traded fund iShares ESG Aware MSCI USA ETF (ESGU) provides investors broad exposure to the Style Box - All Cap Growth category of the market.What Are Smart Beta ETFs?The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option 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.These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.Fund Sponsor & IndexThe fund is managed by Blackrock, and has been able to amass over $13.27 billion, which makes it one of the largest ETFs in the Style Box - All Cap Growth. Before fees and expenses, ESGU 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 ExpensesWhen 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.Operating expenses on an annual basis are 0.15% for this ETF, which makes it one of the least expensive products in the space.It's 12-month trailing dividend yield comes in at 1.18%.Sector Exposure and Top HoldingsWhile ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 33.50% of the portfolio --while Financials and Consumer Discretionary round out the top three.When you look at individual holdings, Apple Inc (AAPL) accounts for about 6.62% of the fund's total assets, followed by Nvidia Corp (NVDA) and Microsoft Corp (MSFT).The top 10 holdings account for about 33.05% of total assets under management.Performance and RiskThe ETF has added roughly 0.50% so far this year and was up about 27.13% in the last one year (as of 01/08/2025). In the past 52-week period, it has traded between $104.12 and $134.05.The ETF has a beta of 1.03 and standard deviation of 17.81% for the trailing three-year period. With about 288 holdings, it effectively diversifies company-specific risk.AlternativesIShares ESG Aware MSCI USA ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.Vanguard ESG U.S. Stock ETF (ESGV) tracks FTSE US ALL CAP CHOICE INDEX and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) tracks ----------------------------------------. Vanguard ESG U.S. Stock ETF has $10.10 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $20.94 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 LineTo 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.Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report iShares ESG Aware MSCI USA ETF (ESGU): ETF Research Reports Apple Inc. (AAPL): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Vanguard ESG U.S. Stock ETF (ESGV): ETF Research Reports JPMorgan Nasdaq Equity Premium Income ETF (JEPQ): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks