This is a passive ETF that tracks Nuveen's ESG large-cap value index. It combines environmental, social, and governance (ESG) screening with the US large-cap value stock universe. After selecting the top ESG companies in each sector, it determines portfolio weights using a risk-adjusted multi-factor approach.

It suits long-term investors who want value-style exposure while also reflecting ESG principles in their investment criteria.

Launched by Nuveen in 2016, it is managed passively (index tracking).

The base universe consists of US-listed large-cap companies that show value characteristics based on price-to-book ratio, price-to-earnings ratio, and dividend yield. Companies involved in specific businesses such as alcohol, weapons, gambling, and nuclear power, as well as companies exceeding carbon emission thresholds, are then excluded. The index selects the top ESG-scoring group within each sector and sets weights using a risk-adjusted multi-factor approach.

• Integrates ESG screening and a value style into a single index
• Applies a top-ESG filter within each sector, then weights holdings using a risk-adjusted multi-factor approach

Assets under management (AUM) stand at $2.6B, and the expense ratio is 0.26% per year.

The fee level appears low relative to the category average, so the cost burden is comparatively light over a long holding period.

The US large-cap value segment tends to alternate between relative strength and weakness versus growth stocks, depending on the interest rate environment and the economic cycle. Because of its relatively high weighting in energy, financials, and health care, changes in conditions in those sectors have a considerable effect on returns.

Steady inflows are observed, centered on ESG-conscious institutional investors and pension funds that apply responsible investing principles. Demand remains for products that satisfy both a value style and ESG criteria, and the fund's asset size has stayed at a stable level.

Combining ESG and a value style is its distinguishing feature, but investors should be mindful of limited diversification from a narrowed universe and of the ESG criteria bias in stock selection.

The AVUV, VLUE, JAVA, FVAL, and VFVA shown in the table are similar value-category ETFs, with points of comparison in strategy, expense ratio, and AUM size. AVUV concentrates on small-cap value, while VLUE tracks iShares' pure value factor index, maximizing value exposure without an ESG filter. FVAL is Fidelity's multifactor value approach, and VFVA is Vanguard's value factor ETF. Investors seeking pure value exposure without an ESG filter can compare VLUE or VFVA, and those interested in small-cap value can consider AVUV. As a direct substitute, ESGV, which takes the same ESG value approach, is also worth considering.

Before investing in NULV, it is important to first check whether the value style and ESG criteria fit your own investment principles. You should also consider the limited universe and the potential for sector bias that result from applying the ESG filter.

The dual filter of value style and ESG narrows the universe, which can lead to concentration in certain sectors. Relative underperformance may continue during periods of growth stock strength, and exchange rate movements also affect returns in won terms.

It is an option worth considering for investors who want ESG principles and value-style exposure at the same time. If you want to track a pure value index, VLUE, VFVA, or a value strategy without ESG may be a better fit, so it is advisable to compare options against your own investment criteria.