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

Designed to provide broad exposure to the World ETFs category of the market, the iShares MSCI ACWI Low Carbon Target ETF (CRBN) is a smart beta exchange traded fund launched on 12/08/2014.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

The fund is sponsored by Blackrock. It has amassed assets over $544.04 million, making it one of the larger ETFs in the World ETFs. This particular fund 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.

Operating expenses on an annual basis are 0.20% for CRBN, making it one of the least expensive products in the space.

It's 12-month trailing dividend yield comes in at 1.82%.

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 3.85% of the fund's total assets, followed by Microsoft Corp (MSFT) and Amazon Com Inc (AMZN).

CRBN's top 10 holdings account for about 15.52% of its total assets under management.

Performance and Risk

The ETF has added roughly 10% and it's up approximately 14.87% so far this year and in the past one year (as of 11/16/2020), respectively. CRBN has traded between $89.44 and $141.31 during this last 52-week period.

CRBN has a beta of 0.95 and standard deviation of 21.05% for the trailing three-year period, which makes the fund a low risk choice in the space. With about 1412 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 EM ETF (ESGE) tracks MSCI Emerging Markets ESG Focus Index and the iShares ESG MSCI USA ETF (ESGU) tracks MSCI USA ESG Focus Index. IShares ESG MSCI EM ETF has $5.42 billion in assets, iShares ESG MSCI USA ETF has $11.82 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
 
Microsoft Corporation (MSFT): Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
Apple Inc. (AAPL): Free Stock Analysis Report
 
iShares ESG MSCI EM ETF (ESGE): ETF Research Reports
 
iShares ESG MSCI USA ETF (ESGU): ETF Research Reports
 
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