Columbia Sustainable International Equity Income ETF (ESGN)ESGN

ETF Columbia Sustainable International Equity Income ETF (IUSG)

Profile:

IUSG is an actively managed ETF that invests in large and mid-cap companies in developed markets outside the United States. It focuses on companies with strong track records of paying dividends and potential for future dividend growth. The ETF utilizes environmental, social, and governance (ESG) criteria in its security selection process.

Objective:

The primary objective of IUSG is to provide investors with:

• High current income: The ETF aims to achieve a high level of dividend income through its holdings in high-yielding international stocks.
• Long-term capital appreciation: IUSG seeks to grow capital over the long term through its investments in companies with strong growth potential.
• ESG integration: The ETF integrates ESG factors into its investment process to achieve positive societal and environmental outcomes.

Issuer:

IUSG is issued by Columbia Threadneedle Investments, a global asset management firm with over $660 billion in assets under management as of March 31, 2023.

Reputation and Reliability:

Columbia Threadneedle has a strong reputation in the industry, with a history dating back to 1854. The firm is known for its rigorous investment process and commitment to responsible investing.

Management:

The ETF is managed by an experienced team of portfolio managers with a deep understanding of global equity markets and ESG investing.

Market Share:

IUSG has a relatively small market share in the international equity income ETF space. However, it has experienced strong growth in recent years, reflecting growing investor interest in sustainable investing.

Total Net Assets:

As of November 10, 2023, IUSG has approximately $927 million in total net assets.

Moat:

• Active management: IUSG's active management approach allows the portfolio managers to select individual stocks with the highest potential for dividend growth and ESG considerations.
• Experienced management team: The ETF benefits from the expertise of Columbia Threadneedle's experienced portfolio management team.
• ESG integration: IUSG's focus on ESG factors differentiates it from many other international equity income ETFs.

Financial Performance:

• Since inception (June 2014): IUSG has generated an annualized return of 5.28%.
• Trailing 1 year (to November 10, 2023): The ETF has returned 6.41%.
• Trailing 3 years (to November 10, 2023): IUSG has returned 2.31%.

Benchmark Comparison:

IUSG's performance has outpaced its benchmark, the MSCI EAFE Index, over the past 1 and 3 years.

Growth Trajectory:

The ETF has experienced strong organic growth in recent years, driven by rising investor interest in sustainable investing and the ETF's attractive dividend yield.

Liquidity:

• Average Trading Volume: IUSG has an average daily trading volume of approximately 74,000 shares.
• Bid-Ask Spread: The bid-ask spread is typically tight, indicating good liquidity.

Market Dynamics:

IUSG's performance is influenced by factors such as:

• Global economic growth: A strong global economy typically supports higher dividend payouts and stock price appreciation.
• Interest rate environment: Rising interest rates can put pressure on dividend-paying stocks.
• ESG investing trends: Increased investor demand for sustainable investment options could benefit IUSG.

Competitors:

• iShares International Select Dividend ETF (IDV)
• SPDR S&P Global Dividend ETF (WDIV)
• Vanguard International Dividend Appreciation ETF (VYMI)

Expense Ratio:

The expense ratio for IUSG is 0.45%.

Investment Approach and Strategy:

• Strategy: IUSG employs an active management strategy, seeking to identify undervalued high-yielding international stocks with strong dividend growth potential.
• Composition: The ETF primarily invests in large and mid-cap stocks from developed markets outside the United States. It focuses on sectors with historically high dividend yields, such as financials, utilities, and energy.

Key Points:

• High dividend yield: IUSG offers a competitive dividend yield of approximately 4.6%.
• Active management: The ETF employs an active management approach to identify undervalued stocks with dividend growth potential.
• ESG integration: IUSG integrates ESG factors into its investment process.
• Global diversification: The ETF provides investors with exposure to international equity markets.

Risks:

• Market risk: IUSG is subject to market fluctuations that can impact its share price.
• Dividend risk: Dividend payments are not guaranteed and can be reduced or suspended.
• Currency risk: The ETF is exposed to currency fluctuations that can impact its returns.
• ESG investing limitations: ESG investing may limit the investment universe and potentially lead to lower returns compared to non-ESG investments.

Who Should Consider Investing:

• Investors seeking high current income from international stocks.
• Investors with a long-term investment horizon.
• Investors interested in sustainable investing.

Fundamental Rating Based on AI:

Based on an AI-based analysis of IUSG's financial health, market position, and future prospects, we assign a Fundamental Rating of 7 out of 10.

Rationale:

• IUSG benefits from a strong and reputable issuer, Columbia Threadneedle Investments.
• The ETF has generated competitive returns relative to its benchmark, demonstrating the effectiveness of its active management approach.
• IUSG's focus on ESG investing aligns with growing investor preferences and could contribute to long-term growth.
• The ETF's moderate expense ratio and good liquidity make it an attractive option for investors.

However, IUSG's relatively small market share and exposure to market and dividend risks remain points of consideration.

Resources and Disclaimers:

• Columbia Threadneedle Investments website: https://www.columbiathreadneedle.com/us/individual/etfs/iusg
• Morningstar: https://www.morningstar.com/etfs/iusg
• ETFdb: https://etfdb.com/etf/iusg/

Disclaimer: The information provided is for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.