Is Nuveen ESG Small-Cap ETF (NUSC) a Strong ETF Right Now?

Designed to provide broad exposure to the Style Box - Small Cap Growth category of the market, the Nuveen ESG Small-Cap ETF (NUSC) is a smart beta exchange traded fund launched on 12/13/2016.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader 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.

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Learn More Powered by Money.com - Yahoo may earn commission from the links above. On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

The fund is managed by Nuveen, and has been able to amass over $1.15 billion, which makes it one of the average sized ETFs in the Style Box - Small Cap Growth. Before fees and expenses, this particular fund seeks to match the performance of the TIAA ESG Small-Cap Index.

The Nuveen ESG USA Small-Cap Index composed of equity securities issued by small-capitalization companies listed on U.S. exchanges.

Cost & Other Expenses

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.31%, making it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 1.16%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

For NUSC, it has heaviest allocation in the Financials sector --about 18.6% of the portfolio --while Industrials and Consumer Discretionary round out the top three.

When you look at individual holdings, Comfort Systems Usa Inc (FIX) accounts for about 1.1% of the fund's total assets, followed by Technipfmc Plc (FTI) and Gamestop Corp.(new) Cl. A (GME).

Story ContinuesThe top 10 holdings account for about 9.45% of total assets under management.

Performance and Risk

Year-to-date, the Nuveen ESG Small-Cap ETF has lost about -0.84% so far, and was up about 7.94% over the last 12 months (as of 07/08/2025). NUSC has traded between $33.38 and $46.20 in this past 52-week period.

The ETF has a beta of 1.06 and standard deviation of 21.07% for the trailing three-year period. With about 458 holdings, it effectively diversifies company-specific risk .

Alternatives

Nuveen ESG Small-Cap ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.

Vanguard ESG U.S. Stock ETF (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 has $10.68 billion in assets, iShares ESG Aware MSCI USA ETF has $13.83 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 Style Box - Small Cap Growth

Bottom Line

To 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.

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Nuveen ESG Small-Cap ETF (NUSC): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

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