A sound investment process and strong management team underpin Nuveen ESG Large-Cap ETF's Morningstar Medalist Rating of Bronze. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's investment process inspires confidence and earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in liquidity exposure and volatility exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

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Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Nuveen ESG Large-Cap ETF earns an Above Average Process Pillar rating. The most significant contributor to the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The parent firm's risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.1 stars, also supports the process. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 50%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's modest success ratio suggests that the firm could do better across its fund lineup.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the investment results, before fees and expenses, of the TIAA ESG USA Large-Cap Index.  Under normal market conditions, the fund invests at least 80% of the sum of its net assets and the amount of any borrowings for investment purposes in component securities of the index. The index selects from the securities included in the MSCI USA Index, and which generally consists of large-and mid-capitalization segments of the U.S. market. 

 The portfolio is overweight in technology by 3.2 percentage points in terms of assets compared with the category average, and its basic materials allocation is similar to the category. The sectors with low exposure compared to category peers are consumer cyclical and energy; however, the allocations are similar to the category. The portfolio is positioned across 122 holdings and its assets are more dispersed than peers in the category. In particular, 31.1% of the portfolio's assets are concentrated in the top 10 fund holdings, as opposed to the typical peer's 48.8%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 71% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Above Average

Process

Nuveen’s team is strong compared with others in the industry, resulting in an Above Average People Pillar rating. There are two managers listed on the fund: Lei Liao, Philip Campagna. The team is well equipped, with an average of 14 years of portfolio management experience. Together, they manage a total of 10 strategies, with solid long-term prospects. The strategies average a Bronze asset-weighted Morningstar Medalist Rating, indicating a position to deliver positive alpha relative to the category median in aggregate.  

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

People

Nuveen has accomplished years of refinement, but a handful of areas keep it from landing among the industry’s best. It retains an Average Parent rating.
Nuveen is the asset-management arm of TIAA. TIAA purchased Nuveen in October 2014 and in January 2017 announced that Nuveen would become the umbrella brand for all its asset-management capabilities, including the legacy Nuveen and TIAA investment teams and their affiliates. 
Since then, a dramatic transformation has taken place. This includes merging all but one affiliated investment team into centralized equity and fixed-income groups, which are now among the industry’s largest. All operations, technology, and sales functions were centralized and modernized; in 2019, the firm rolled out a comprehensive long-term incentive plan that has helped attract and retain talent, and the previously expansive investment lineup has been mostly cleaned up.
Nuveen’s investment strengths are predominantly in fixed income and real assets. While its municipal team is among the industry’s more ubiquitous, its aggressive approach has been a sticking point for several years. Its experienced equity team hasn’t distinguished its performance from peers’. Finally, CEO Jose Minaya has built a robust management team, but several of them are recent outside hires and so it will take time to see how they integrate with Minaya’s modernized vision for the firm.

Average

Parent

Nuveen ESG Large-Cap ETF

NULC tracks a multi-factor-weighted index of large-cap companies listed on US exchanges. Holdings are screened for environmental, social, and governance criteria (ESG).

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