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

Zacks Equity Research

The iShares MSCI ACWI Low Carbon Target ETF (CRBN) was launched on 12/08/2014, and is a smart beta exchange traded fund designed to offer 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.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is sponsored by Blackrock. It has amassed assets over $617.56 million, making it one of the larger ETFs in the World ETFs. CRBN seeks to match the performance of the MSCI ACWI Low Carbon Target Index before fees and expenses.

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

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.

Annual operating expenses for CRBN are 0.20%, which makes it one of the least expensive products in the space.

It's 12-month trailing dividend yield comes in at 1.42%.

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.

When you look at individual holdings, Apple Inc (AAPL) accounts for about 3.59% of the fund's total assets, followed by Microsoft Corp (MSFT) and Amazon Com Inc (AMZN).

The top 10 holdings account for about 14.98% of total assets under management.

Performance and Risk

The ETF has added about 16.46% and is up roughly 15.87% so far this year and in the past one year (as of 12/30/2020), respectively. CRBN has traded between $89.44 and $148.60 during this last 52-week period.

CRBN has a beta of 0.97 and standard deviation of 21.14% for the trailing three-year period, which makes the fund a low risk choice in the space. With about 1423 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 Aware MSCI EM ETF (ESGE) tracks MSCI Emerging Markets ESG Focus Index and the iShares ESG Aware MSCI USA ETF (ESGU) tracks MSCI USA ESG Focus Index. IShares ESG Aware MSCI EM ETF has $6.04 billion in assets, iShares ESG Aware MSCI USA ETF has $13.24 billion. ESGE has an expense ratio of 0.25% and ESGU charges 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 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 ESG Aware MSCI EM ETF (ESGE): ETF Research Reports
 
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