Nuveen Debuts Active, ESG ETFs

Today, Nuveen rolled out two very different ETFs that each represent milestones for the firm in their own right. The Nuveen Growth Opportunities ETF (NUGO) is the firm’s first actively managed semitransparent ETF that is not based on one of Nuveen’s existing mutual funds. Meanwhile, the Nuveen ESG Dividend ETF (NUDV) is one of the few ESG ETFs to focus on yield.

While NUGO lists on the NYSE Arca with an expense ratio of 0.55%, NUDV trades on Cboe Global Markets with an expense ratio of 0.25%.

NUGO

Nuveen Portfolio Manager Karen Hiatt will manage the portfolio for NUGO. She has an impressive track record of outperformance in the large cap growth space, where she uses rigorous analysis to seek out market inefficiencies, despite the belief by many that large cap growth is a highly efficient segment.

“I take nonconsensus views to whittle down the Russell 1000 Growth Index into, ideally, 45 to 50 stocks within the portfolio that are the highest conviction holdings,” Hiatt said, who characterizes herself as a stockpicker. “This is a truly actively managed portfolio.”

She notes that she analyzes the primary components of growth, quality and valuation, looking beyond the next quarter or two, where she believes inefficiencies tend to be magnified. Digitization is one of the megatrends she is focused on and that she believes is in its early stages and has ramifications across multiple sectors. She points to companies like Zscaler and Square as examples she thinks have the potential for significant growth going forward.

“I’m not looking for a flash in the pan for short-term cyclical growth. I’m looking for long-term opportunities that extend beyond just where we are [in the next couple of quarters,]” Hiatt added.  

NUGO looks to outperform the Russell 1000 Growth Index and relies on a proxy portfolio model to obscure its exact holdings.

NUDV

NUDV is one of the few yield-focused ESG ETFs available to investors. Its ESG framework is the same that is used across Nuveen’s entire family of ESG ETFs, which relies on MSCI’s ESG analytics and evaluates companies relative to their industry peers. The methodology also automatically excludes companies operating in the alcohol, tobacco, nuclear power, weapons and gambling industries. It additionally takes into account carbon emissions and fossil fuel reserves, according to the fund prospectus.

NUDV’s approach targets securities that are generating high dividend income and demonstrating strong quality characteristics. It is weighted by market capitalization within each sector, with sector weightings adjusted to reflect their weights in the parent index, the document says.

Expense Ratios Cut

In addition to the two launches, Nuveen has also decreased the expense ratios on seven of its equity ESG ETFs by 10 basis points. It has lowered the expense ratios on two of its fixed income ESG ETFs by 5 basis points.

The affected funds and their new expense ratios are as follows:

• Nuveen ESG Large-Cap Growth ETF (NULG), 0.25%
• Nuveen ESG Large-Cap Value ETF (NULV), 0.25%
• Nuveen ESG Mid-Cap Growth ETF (NUMG), 0.30%
• Nuveen ESG Mid-Cap Value ETF (NUMV), 0.30%
• Nuveen ESG Small-Cap ETF (NUSC), 0.30%
• Nuveen ESG International Developed Markets Equity ETF (NUDM), 0.30%                                                        
• Nuveen ESG Emerging Markets Equity ETF (NUEM), 0.35%
• Nuveen ESG U.S. Aggregate Bond ETF (NUBD), 0.15%
• Nuveen ESG High Yield Corporate Bond ETF (NUHY), 0.30%

The issuer says that the cost reductions were made possible by the amount of assets gathered by the funds.

Contact Heather Bell at [email protected]