Making its debut on 06/07/2017, smart beta exchange traded fund Nuveen ESG Emerging Markets Equity ETF (NUEM) provides investors broad exposure to the Broad Emerging Market ETFs 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Nuveen, NUEM has amassed assets over $376.28 million, making it one of the average sized ETFs in the Broad Emerging Market ETFs. This particular fund seeks to match the performance of the TIAA ESG Emerging Markets Equity Index before fees and expenses.
The Nuveen ESG Emerging Markets Equity Index uses a rules-based methodology to arrive at a diversified portfolio of equity securities issued by companies located in countries with emerging markets that adhere to predetermined ESG, controversial business involvement and low-carbon screen criteria.
Cost & Other Expenses
When 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 0.36% for NUEM, making it on par with most peer products in the space.
NUEM's 12-month trailing dividend yield is 3.11%.
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.
When you look at individual holdings, Taiwan Semiconductor Manuaccounts for about 14.36% of the fund's total assets, followed by Tencent Holdings Ltd and Delta Electronics Inc.
The top 10 holdings account for about 32.44% of total assets under management.
Performance and Risk
Year-to-date, the Nuveen ESG Emerging Markets Equity ETF has gained about 15.05% so far, and was up about 26.56% over the last 12 months (as of 07/03/2026). NUEM has traded between $33.06 $44.14 in this past 52-week period.
The fund has a beta of 0.69 and standard deviation of 19.83% for the trailing three-year period. With about 184 holdings, it effectively diversifies company-specific risk .
Alternatives
Nuveen ESG Emerging Markets Equity ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard ESG U.S. Stock ETF Shares (ESGV) tracks FTSE US ALL CAP CHOICE INDEX and the iShares ESG Aware MSCI USA ETF (ESGU) tracks MSCI USA ESG Focus Index. Vanguard ESG U.S. Stock ETF Shares has $13.1 billion in assets, iShares ESG Aware MSCI USA ETF has $17.66 billion. ESGV has an expense ratio of 0.09% and ESGU changes 0.15%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market ETFs
Bottom Line
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Nuveen ESG Emerging Markets Equity ETF (NUEM): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).