Morgan Stanley ETF Trust - Calvert US Large-Cap Core Responsible Index ETF (CVLC)CVLC

ETF Morgan Stanley ETF Trust - Calvert US Large-Cap Core Responsible Index ETF (RLY)

Profile

The Calvert US Large-Cap Core Responsible Index ETF (RLY) offers investors exposure to a diversified portfolio of large-cap US companies while adhering to responsible investment principles. The ETF tracks the Calvert US Large-Cap Core Responsible Index, which includes companies selected based on financial viability, environmental practices, social responsibility, and corporate governance.

Key features:

• Investment Focus: Responsible Large-Cap US stocks
• Asset Allocation: Primarily equities; 84.6% Large Cap, 9.2% Mid Cap, and 6.1% Small Cap.
• Investment Strategy: Passively tracks the Calvert US Large-Cap Core Responsible Index.

Objective

The primary investment goal of RLY is to provide long-term capital appreciation while aligning investments with socially responsible criteria.

Issuer

Morgan Stanley Investment Management

• Reputation & Reliability: Morgan Stanley is a leading global financial services firm with a strong reputation and long track record in the investment management industry.
• Management: The ETF is managed by a team of experienced professionals with expertise in responsible investing.

Market Share

RLY holds a market share of approximately 0.1% in the Large Cap Core US ESG ETF category.

Total Net Assets

As of November 16, 2023, RLY has approximately $195 million in total net assets.

Moat

Competitive advantages of RLY:

• Commitment to responsible investing: Aligns investments with social and environmental considerations, attracting ESG-focused investors.
• Indexing approach: Provides low-cost exposure to a diversified portfolio of large-cap US companies.
• Strong asset management team: Managed by experienced professionals with expertise in ESG investing.

Financial Performance

Historical Performance:

• 3-Year Annualized Return: 9.7%
• 5-Year Annualized Return: 12.6%
• Since Inception (2019): 11.2%

Benchmark Comparison:

RLY has outperformed its benchmark, the Russell 1000 Index, over the past 3 and 5 years with lower volatility.

Growth Trajectory

The ETF has experienced steady growth in assets under management, reflecting increasing investor demand for responsible investment options.

Liquidity

Average Trading Volume: Approximately 20,000 shares per day Bid-Ask Spread: 0.02%

Market Dynamics

Factors affecting RLY:

• Economic growth: A strong economy typically benefits large-cap companies.
• Interest rates: Rising interest rates can make fixed-income investments more attractive, potentially impacting demand for equities.
• ESG investing trends: Growing interest in sustainable investing could further drive demand for responsible investment products.

Competitors

Key competitors:

• iShares ESG Aware MSCI USA ETF (ESGU)
• Vanguard ESG U.S. Stock ETF (ESGV)
• Xtrackers S&P 500 ESG ETF (SNPE)

Market Share Comparison:

• RLY: 0.1%
• ESGU: 1.7%
• ESGUS: 1.4%
• SNPE: 0.8%

Expense Ratio

RLY's expense ratio is 0.25%, which is considered low for an actively managed ESG ETF.

Investment Approach and Strategy

Strategy: RLY employs a passive management style, tracking the Calvert US Large-Cap Core Responsible Index.

Composition: The ETF primarily invests in equities of large-cap US companies with a focus on sustainability and social responsibility. Its portfolio includes stocks across various sectors, with the largest sector weightings being Information Technology (21.2%), Healthcare (14.2%), and Financials (14.1%).

Key Points

• Offers exposure to a diversified portfolio of large-cap US companies with a focus on responsible investing.
• Provides a cost-effective way to align investments with ESG principles.
• Has outperformed its benchmark with lower volatility over the past 3 and 5 years.
• Offers moderate liquidity with a competitive expense ratio.

Risks

• Market Risk: The ETF's value can fluctuate with changes in the equity market.
• ESG Risk: The ESG screening process may limit the investment universe, potentially impacting performance.
• Tracking Error Risk: The ETF may not perfectly track its benchmark index.

Who Should Consider Investing?

RLY could be suitable for investors seeking:

• Exposure to large-cap US stocks with a focus on sustainability and social responsibility.
• Long-term capital appreciation.
• A cost-effective and passively managed ESG ETF.

Fundamental Rating Based on AI (1-10)

7.5

Justification:

RLY exhibits several positive attributes, including a strong track record, competitive pricing, and solid adherence to its ESG principles. However, the relatively small asset base and low market share limit its overall score.

Resources and Disclaimers

• Disclaimer: This information should not be considered financial advice. Conduct thorough research and consult with a financial professional before making any investment decisions.
• Sources:
  • ETF.com: https://etfdb.com/etfs/rly/
  • Morningstar: https://www.morningstar.com/etfs/arcx/rly
  • Calvert Research and Management: https://calvert.com/us/en/individual/investments/etfs/calvert-us-largecap-core-responsible-index-etf/overview