Is iShares MSCI ACWI Low Carbon Target ETF (CRBN) a Strong ETF Right Now?

The iShares MSCI ACWI Low Carbon Target ETF (CRBN) made its debut on 12/08/2014, and is a smart beta exchange traded fund that provides broad exposure to the World ETFs category of the market.

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 work great for investors who believe in market efficiency. They provide 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.

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

Managed by Blackrock, CRBN has amassed assets over $455.13 M, making it one of the larger ETFs in the World ETFs. Before fees and expenses, this particular fund seeks to match the performance of the MSCI ACWI Low Carbon Target Index.

The MSCI ACWI Low Carbon Target Index is designed to address two dimensions of carbon exposure ? carbon emissions and potential carbon emissions from fossil fuel reserves.

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Operating expenses on an annual basis are 0.20% for this ETF, which makes it one of the least expensive products in the space.

The fund has a 12-month trailing dividend yield of 2.30%.

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.

Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 2.21% of total assets, followed by Apple Inc (AAPL) and Amazon Com Inc (AMZN).

Its top 10 holdings account for approximately 11.66% of CRBN's total assets under management.

Performance and Risk

The ETF has added about 14.64% and is up roughly 1.22% so far this year and in the past one year (as of 08/21/2019), respectively. CRBN has traded between $99 and $122.22 during this last 52-week period.

The ETF has a beta of 0.97 and standard deviation of 11.72% for the trailing three-year period, making it a low risk choice in the space. With about 1297 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares MSCI ACWI Low Carbon Target ETF is a reasonable option for investors seeking to outperform the World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

IShares ESG MSCI USA Leaders ETF (SUSL) tracks MSCI USA EXTENDED ESG LEADERS INDEX and the iShares MSCI KLD 400 Social ETF (DSI) tracks MSCI KLD 400 Social Index. IShares ESG MSCI USA Leaders ETF has $1.41 B in assets, iShares MSCI KLD 400 Social ETF has $1.47 B. SUSL has an expense ratio of 0.10% and DSI charges 0.25%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the World ETFs.

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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iShares MSCI ACWI Low Carbon Target ETF (CRBN): ETF Research Reports
 
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iShares MSCI KLD 400 Social ETF (DSI): ETF Research Reports
 
iShares ESG MSCI USA Leaders ETF (SUSL): ETF Research Reports
 
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