Family Adds Large Cap ESG ETF

Today Nuveen rolled out a large cap socially responsible ETF that uses the same methodology as the rest of its ESG family. The Nuveen ESG Large-Cap ETF joins a family of eight other ESG funds, including one of the few fixed income ETFs in that space.

NULC comes with an expense ratio of 0.20% and lists on Cboe Global Markets, parent company of ETF.com.

The new fund does not invest in the existing Nuveen ESG Large-Cap Value ETF (NULV) or the Nuveen ESG Large-Cap Growth ETF (NULG), despite the two funds tracking subsets of NULC’s index.

Methodology

As with Nuveen’s other ESG ETFs, the fund relies on a methodology that excludes companies involved in controversial businesses as well as those that exceed thresholds for carbon emissions. Companies are ranked by their ESG scores with only the top half by market cap selected within each sector. Weightings are determined by an optimization algorithm.

“We know a lot of investors and advisors assume that ESG-branded products are going to be low carbon,” said Jordan Farris, managing director and head of ETF product development at Nuveen. “But that’s not always the case, so we’ve incorporated a distinct set of low-carbon criteria.”

He points out that, prior to NULC, Nuveen’s family of ESG ETFs did not include a fund that a firm like Morningstar would characterize as “Large-Cap Blend,” and that investors had been requesting the product.

“The methodology we use for NULC is identical to the methodology we’ve used for our other equity ESG ETFs. We think it’s really important for clients and advisors to have consistency in methodology when they’re looking at an ESG ETF offering,” added Farris, noting the firm has a methodology document available on its site.

Nuveen notes in a press release that an in-house study found that, for the fourth year in a row, investor interest in “responsible investing” had increased, with 93% of millennials and 78% of those falling outside that cohort saying they were interested in such approaches.

Contact Heather Bell at [email protected]