A Value ETF Skips High Dividend Yields, Focuses on ESG, and Underperforms

"When large-cap growth stocks dominate headlines and valuations stretch, investors holding pure S&P 500 exposure face a familiar question: how do you stay invested in quality companies without chasing momentum? The Nuveen ESG Large-Cap Value ETF (NULV) offers one answer-a portfolio of established, dividend-paying businesses screened for environmental, social, and governance standards, positioned in sectors that historically outperform when growth cools."

"NULV serves as a large-cap value anchor with an ESG overlay. Its return engine relies on established cash flows from mature companies-financials like Citigroup and Morgan Stanley, consumer staples like Coca-Cola and Procter & Gamble, and industrial names like Caterpillar. These are businesses generating steady earnings, often with dividends, trading at lower valuations than growth peers. The ESG screens exclude companies with poor environmental records or governance red flags, narrowing the universe but maintaining diversification across 120+ holdings."

"Over the past five years, NULV has returned 54%, trailing the S&P 500's 79% gain over the same period but outpacing pure value benchmarks like IWD (68%) when you account for the ESG constraint. The fund's 0.26% expense ratio is competitive for an actively screened strategy, and its 47% annual turnover keeps tax drag moderate. NULV delivers on its promise to provide large-cap value exposure with ESG guardrails, but the dual mandate creates friction."

The Nuveen ESG Large-Cap Value ETF (NULV) pairs large-cap value exposure with ESG screening, targeting established, dividend-paying companies. Holdings include financials such as Citigroup and Morgan Stanley, consumer staples like Coca-Cola and Procter & Gamble, and industrials such as Caterpillar, with over 120 diversified positions. NULV returned 54% over five years versus the S&P 500's 79% while outperforming some pure value benchmarks after ESG constraints. The fund charges a 0.26% expense ratio and posts 47% annual turnover. ESG screens reduce energy and commodity exposure, creating potential underperformance during commodity rallies and raising concentration questions such as a 7.71% position in Alphabet.

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