iShares MSCI USA ESG Select (SUSA)

iShares MSCI USA ESG Select ETF (ESGU)

Profile:

ESGU is an ETF that tracks the MSCI USA ESG Select Index. It provides exposure to large- and mid-cap U.S. companies with high ESG (environmental, social, and governance) ratings. The ETF focuses on a diversified portfolio across all sectors, excluding companies involved in controversial activities like tobacco and weapons manufacturing.

Objectives:

• Track the performance of the MSCI USA ESG Select Index.
• Offer investors exposure to U.S. equities with strong ESG credentials.
• Generate long-term capital appreciation with sustainable investment practices.

Issuer:

iShares, a leading global provider of exchange-traded funds (ETFs) with over $2.8 trillion in assets under management. It operates under BlackRock, the world's largest asset manager, known for its strong brand reputation and reliability.

Market Share:

ESGU holds a market share of 0.19% within the US ESG equity ETF category.

Total Net Assets:

The ETF currently has approximately $764.18 million in total net assets.

Moat:

• ESG Focus: ESGU benefits from the growing demand for sustainable investing. Its emphasis on ESG-screened companies positions it favorably in a competitive landscape with rising interest in ethical investing.
• Track Record and Management: iShares' extensive experience and strong reputation provide investors with trust and assurance. BlackRock's robust ESG integration process further adds value.
• Low-cost structure: With an expense ratio of 0.15%, ESGU offers cost-efficient access to a diversified ESG-focused portfolio.

Financial Performance:

• Track Record: Since its inception in November 2018, ESGU has delivered positive annual returns.
• Benchmark Comparison: ESGU has outperformed the S&P 500 in both the 1-year (-5.75% vs. -59.36%) and 3-year periods (58.28% vs. 52.3%).

Growth Trajectory:

The ESG investing space is experiencing substantial global growth. ESGU is positioned to leverage this trend with its strong performance and competitive advantages.

Liquidity:

• Average Trading volume: 582,727 shares.
• Bid-Ask spread: 0.04%.

Market dynamics:

• Economic indicators, interest rate fluctuations, sector performance, ESG regulation changes, and investor trends influence the ETF's market environment.

Competition:

• Key competitors in the US ESG equity ETF category include:
• iShares ESG Aware MSCI USA ETF (ESGU): 0.19% market share.
• Vanguard ESG US Stock ETF (ESGV): 35.75% market share.
• Xtrackers MSCI USA ESG Leaders Equity ETF (USSG): 5.79% market share.

Expense ratio: 0.15%

Investment Approach and Strategy

• Strategy: Passive management, replicating the holdings of the MSCI USA ESG Select index.
• Composition: Primarily holds large- and mid-cap U.S. stocks from diverse sectors, excluding businesses engaged in activities like alcohol, gambling, tobacco, weapons, adult entertainment, and fossil fuels with high carbon reserves.

Key points:

• Focus on sustainable ESG-focused investments from large and medium-sized US companies across multiple industries.
• Strong ESG credentials through a stringent screening process.
• Outperforming benchmark with consistent returns.
• Highly cost efficient with a low expense ratio.
• Good liquidity in the market with a reasonable bid/ask spread.

Risk:

• Volatility inherent to equities and potential market downturns can impact the ETF's value.
• Sector performance fluctuations within the chosen industries affect performance.
• ESG-screening criteria might exclude potentially high-performing companies not adhering to the selected principles, causing potential underperformance in certain market conditions.

Who Should Consider Investing:

• Investors interested in aligning their investments with strong ESG values.
• Individuals seeking long-term capital appreciation while focusing on sustainability.
• Those comfortable with the volatility associated with equity-based investments.

Fundamental Rating Based on AI:

Based on the analysis of financial performance, market positioning, future prospects, and ESG focus, ESGU receives an AI-based fundamental rating of 8.5 out of 10. The ETF benefits from a strong track record, competitive edge in the growing ESG space, low expense ratio, solid portfolio diversification, and its association with iShares and Blackrock. However, the relatively smaller asset under management compared to some competitors and the inherent volatility of equity markets are factors to consider.

** Disclaimer:**

This overview provides basic information for educational purposes and should not serve as financial advice or investment recommendations. Investing always involves risk, and thorough due diligence is essential before any investment decisions.