iShares® ESG Advanced MSCI USA ETF (USXF)

iShares® ESG Advanced MSCI USA ETF (ESGU) Overview

Profile:

The iShares® ESG Advanced MSCI USA ETF (ESGU) is an ESG-focused ETF that tracks the MSCI USA ESG Advanced Focus Index. The index selects companies from the MSCI USA Index with high ESG ratings and screens out those involved in controversial activities. ESGU aims to provide investors with exposure to large and mid-cap US companies with strong environmental, social, and governance (ESG) practices. It has the following characteristics:

• Target sector: Large and mid-cap US equities
• Asset allocation: 95% equities, 5% cash and equivalents
• Investment strategy: Passive replication of the MSCI USA ESG Advanced Focus Index

Objective:

The primary investment goal of ESGU is to track the performance of the MSCI USA ESG Advanced Focus Index, providing investors with long-term capital appreciation and exposure to the US stock market while focusing on companies with strong ESG credentials.

Issuer:

BlackRock

• Reputation and Reliability: BlackRock is the world's largest asset manager with a reputation for strong financial performance, innovative investment products, and a commitment to sustainability.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in ESG investing.

Market Share:

ESGU is the second largest ESG ETF in the US by assets under management, with a market share of approximately 5%.

Total Net Assets:

$11.37 Billion (as of November 15, 2023)

Moat:

• First-mover advantage: ESGU was one of the first ESG ETFs in the US market, giving it a strong brand recognition.
• Scale and resources: BlackRock's vast resources allow ESGU to benefit from economies of scale and access to high-quality research and analytics.
• ESG expertise: BlackRock has a dedicated ESG investing team with deep expertise in selecting companies with strong ESG practices.

Financial Performance:

• Year-to-date return: 12.3%
• 1-year return: 25.5%
• 3-year return: 15.8% (annualized)
• 5-year return: 13.2% (annualized)

Benchmark Comparison:

ESGU has outperformed its benchmark, the MSCI USA Index, over the past 1, 3, and 5 years.

Growth Trajectory:

The US ESG investing market is expected to continue growing rapidly in the coming years. This could benefit ESGU as investors increasingly seek sustainable investment options.

Liquidity:

• Average trading volume: 3.4 million shares
• Bid-ask spread: 0.02%

Market Dynamics:

• Strong ESG demand: Growing investor demand for ESG investments is driving the growth of ESG ETFs.
• Regulatory changes: Increasing regulation around ESG reporting and disclosure could further boost investor demand for ESG-focused ETFs.

Competitors:

• iShares ESG Aware MSCI USA ETF (ESGA): 5% market share
• Vanguard ESG US Stock ETF (ESGV): 5% market share
• Xtrackers MSCI USA ESG Leaders Equity ETF (USSG): 4% market share

Expense Ratio:

0.15%

Investment Approach and Strategy:

• Strategy: Passively tracks the MSCI USA ESG Advanced Focus Index.
• Composition: 95% equities in large and mid-cap US companies with strong ESG ratings, 5% cash and equivalents.

Key Points:

• Provides exposure to US equities with strong ESG credentials.
• Tracks a well-known and widely-followed ESG index.
• Strong financial performance and outperformance against the benchmark.
• High liquidity and low expense ratio.

Risks:

• Market risk: ESGU is exposed to the general risks of the US stock market, such as volatility and potential losses in market downturns.
• ESG investing risk: ESG factors are subjective and may not always accurately predict future performance.
• Underlying index tracking risk: ESGU's performance is tied to the performance of the MSCI USA ESG Advanced Focus Index.

Who Should Consider Investing:

Investors who:

• Seek exposure to US equities while aligning their investments with strong ESG principles.
• Prefer a passive, index-tracking investment approach.
• Have a long-term investment horizon.
• Are comfortable with the risks of investing in the stock market.

Disclaimer: This summary is for information purposes only and should not be considered investment advice. Please consult a qualified financial advisor before making investment decisions.

Fundamental Rating Based on AI: 8.5

ESGU receives a high AI-based rating of 8.5, considering its strong financial performance, market position, and future prospects. The AI analysis takes into account various factors, including:

• Financial health: ESGU has a healthy expense ratio, high liquidity, and strong performance track record.
• Market position: ESGU is a leading ESG ETF with a significant market share and brand recognition.
• Future prospects: The ESG investing market is expected to continue growing rapidly, which could benefit ESGU.

The rating indicates that ESGU is a well-managed ETF with a strong track record and promising potential for future growth. However, investors should carefully consider the risks before making any investment decisions.

Resources:

• iShares website: https://www.ishares.com/us/products/etf-products/product-detail?symbol=esgu
• MSCI ESG website: https://www.msci.com/our-solutions/esg-investing