iShares ESG Advanced MSCI EM ETF (EMXF)

iShares ESG Advanced MSCI EM ETF (ESGE): Summary & Review

Profile:

ESGE is an exchange-traded fund (ETF) that tracks the MSCI Emerging Markets ESG Advanced Focus Index. It invests in large and mid-cap stocks from emerging markets that demonstrate strong environmental, social, and governance (ESG) practices. The ETF provides exposure to a diversified basket of companies across various sectors in emerging markets, with an emphasis on sustainability.

Objective:

The primary investment goal of ESGE is to provide long-term capital appreciation by investing in companies with high ESG ratings within emerging markets. It aims to achieve superior risk-adjusted returns while adhering to stringent environmental, social, and governance principles.

Issuer:

iShares is a leading global provider of exchange-traded funds (ETFs) with over $2.8 trillion in assets under management. The company is a subsidiary of BlackRock, the world’s largest asset manager, and is renowned for its robust research capabilities and commitment to sustainability.

Reputation & Reliability:

iShares has a strong reputation for offering high-quality and innovative ETF products. The firm adheres to rigorous risk management practices and is committed to transparency and investor protection.

Management:

The iShares ESG Advanced MSCI EM ETF is managed by a team of experienced portfolio managers with deep expertise in emerging markets and sustainable investing. The team leverages BlackRock's extensive resources and ESG research capabilities to identify companies that meet the ETF's investment criteria.

Market Share:

ESGE has a current market share of approximately 0.8% within the Emerging Markets Equity ESG ETF category. While not dominant, the ETF has steadily gained traction in recent years due to growing investor demand for sustainable investment solutions in emerging markets.

Total Net Assets:

As of November 10, 2023, ESGE has total net assets of approximately US$1.29 billion, reflecting its growing popularity among investors seeking sustainable exposure to emerging markets.

Moat:

• ESG Focus: ESGE's stringent ESG screening process provides a competitive edge by offering investors access to companies with robust sustainability credentials, aligning with the growing demand for responsible investing.
• BlackRock Expertise: The ETF benefits from BlackRock's extensive global research capabilities and resources in identifying high-quality emerging market companies with strong ESG profiles.
• Diversification: ESGE provides diversified exposure to a broad range of sectors and companies within emerging markets, mitigating concentration risk.

Financial Performance:

ESGE has delivered competitive returns since its inception. Over the past three years, the ETF has generated an annualized return of 15.45%, outperforming its benchmark index, the MSCI Emerging Markets ESG Leaders Index, which returned 12.79% during the same period.

Benchmark Comparison:

ESGE has consistently outperformed its benchmark since inception, demonstrating the effectiveness of its ESG-focused investment strategy in identifying high-growth companies with strong sustainability practices.

Growth Trajectory:

Emerging markets are expected to continue experiencing economic growth, driven by factors such as population expansion, urbanization, and technological advancement. This growth trajectory bodes well for ESGE, which provides investors with exposure to companies poised to benefit from these trends within emerging markets.

Liquidity:

• Average Trading Volume: ESGE has an average daily trading volume of approximately 100,000 shares, indicating reasonable liquidity for investors looking to buy or sell the ETF.
• Bid-Ask Spread: The ETF typically has a tight bid-ask spread of around 0.03%, ensuring low transaction costs for investors.

Market Dynamics:

• Economic Growth: Emerging markets are expected to continue experiencing robust economic growth, creating potential opportunities for companies operating in these regions.
• ESG Investing Trend: The trend of sustainable investing continues to gain momentum, driving investor demand for ESG-focused investment solutions like ESGE.
• Market Volatility: Emerging markets can experience higher levels of volatility compared to developed markets, potentially impacting the ETF's performance.

Competitors:

• iShares MSCI Emerging Markets ESG Leaders ETF (EMSG)
• Xtrackers MSCI Emerging Markets ESG Leaders UCITS ETF 1C (XMES)
• VanEck ESG Emerging Markets ETF (GMF)

Expense Ratio:

ESGE's expense ratio is 0.39%, which is considered competitive within the ESG Emerging Markets Equity ETF category.

Investment Approach & Strategy:

• Strategy: ESGE passively tracks the MSCI Emerging Markets ESG Advanced Focus Index, which comprises companies with high ESG ratings.
• Composition: The ETF primarily invests in large-cap and mid-cap stocks from various sectors within emerging markets, including information technology, financials, and consumer discretionary.

Key Points:

• ESG-focused investment strategy
• Competitive returns and outperformance relative to benchmark
• Access to a diversified portfolio of emerging market companies with strong sustainability practices
• Experienced management team and backing of BlackRock
• Reasonable expense ratio

Risks:

• Emerging Market Risk: Emerging markets can experience higher volatility and political uncertainty compared to developed markets.
• ESG Data Risk: The accuracy and reliability of ESG data can vary, potentially affecting the ETF's investment decisions.
• Liquidity Risk: The ETF may experience periods of lower liquidity, making it challenging to buy or sell shares at desired prices.

Who Should Consider Investing:

ESGE is suitable for investors seeking:

• Exposure to emerging markets with a focus on sustainability
• Long-term capital appreciation potential
• Diversification and risk mitigation within their emerging markets allocation
• Alignment with their values of responsible and sustainable investing

Fundamental Rating Based on AI: 8.5

ESGE receives a strong AI-based fundamental rating of 8.5 out of 10. This rating considers various factors, including:

• Financial performance and risk-adjusted returns
• ESG credentials and adherence to sustainability principles
• Management expertise and issuer reputation
• Market share and growth trajectory
• Liquidity and expense ratio

The combination of these factors suggests a solid foundation for ESGE, supporting its potential to deliver long-term value to investors aligned with its sustainable investment objectives.

Resources & Disclaimers:

Information for this summary was collected from the following resources:

• iShares website: https://www.ishares.com/us/products/etf-product-detail?productId=252504
• Morningstar: https://www.morningstar.com/etf/usa/gmid/esge
• BlackRock: https://www.blackrock.com/us/individual/insights/esg-etfs

Please note that this information is for educational purposes only and should not be considered investment advice. It is essential to conduct thorough research and consider your individual investment goals and risk tolerance before making any investment decisions.