A strong management team and sound investment process underpin Nuveen Small Cap Select ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The management team's considerable industry experience drives an Above Average People Pillar rating for the strategy. The strategy's investment approach stands out and earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in quality exposure and has an overweight in volatility exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

Permian Resources Corp

Wintrust Financial

Northern Oil and Gas

Evercore

Onto Innovation

Semtech

FirstCash Holdings

Q2 Hld

Primo Water

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. Nuveen Small Cap Select ETF earns an Above Average Process Pillar rating. 

The main driver of the rating is the fund's excellent long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. The process is limited by the parent firm's five-year retention rate of 76%, which suggests it could do more to retain its portfolio managers.

 This strategy owns more growth stocks than its peers in the Small Blend Morningstar Category. But in terms of size exposure, it does not have much of a bias and resembles the typical portfolio. Analyzing additional factors, this strategy has consistently favored low-quality stocks compared with Morningstar Category peers over the past few years. Such positions do not tend to provide much ballast for a portfolio. In the latest month, the strategy was also less exposed to the Quality factor compared with Morningstar Category peers. This strategy has also exhibited a tilt toward high-volatility stocks over these years, meaning it has invested in companies that have a higher historical standard deviation of returns. Such exposure tends to pay off when markets are hot and to be costly when they are not. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. In addition, this strategy has shown a strong tendency to hold fewer stocks with high dividend or buyback yields over peers in recent years. Returning capital to shareholders often is not the highest priority of such businesses. The shares of such companies can deliver strong returns if they fulfill their growth projections, but they also carry more risk. In recent months, the strategy also had less Yield factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in technology and healthcare relative to the category average by 7.3 and 4.6 percentage points, respectively. The sectors with low exposure compared to category peers are consumer cyclical and industrials, underweight the average by 3.0 and 2.8 percentage points of assets, respectively. The strategy owns 87 securities and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 19.4% of the fund’s assets were concentrated in the top 10 fund holdings, as opposed to the category average's 24.4%. And finally, in terms of portfolio turnover, this portfolio turns over its holdings less quickly than peers, potentially leading to lower costs for investors and eliminating a drag on performance.

Above Average

Process

Nuveen Small Cap Select ETF earns an Above Average People Pillar rating. The leading driver of the rating is its parent firm's five-year success ratio of 62%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The stability of the management team also supports the rating. Specifically, the fund has not seen a manager change in the last three years. Lastly, the rating is limited because no manager has invested more than $1 million in the fund.


Jon A. Loth, the longest-tenured manager on the strategy, provides strong guidance, offering 16 years of listed portfolio management experience.  Jon A. Loth has an experienced listed co-manager. Together, they average 14 years of listed portfolio management experience.

People

Nuveen has accomplished years of refinement, but a handful of areas keep it from landing among the industry’s best. It retains an Average Parent rating.
Nuveen is the asset-management arm of TIAA. TIAA purchased Nuveen in October 2014 and in January 2017 announced that Nuveen would become the umbrella brand for all its asset-management capabilities, including the legacy Nuveen and TIAA investment teams and their affiliates. 
Since then, a dramatic transformation has taken place. This includes merging all but one affiliated investment team into centralized equity and fixed-income groups, which are now among the industry’s largest. All operations, technology, and sales functions were centralized and modernized; in 2019, the firm rolled out a comprehensive long-term incentive plan that has helped attract and retain talent, and the previously expansive investment lineup has been mostly cleaned up.
Nuveen’s investment strengths are predominantly in fixed income and real assets. While its municipal team is among the industry’s more ubiquitous, its aggressive approach has been a sticking point for several years. Its experienced equity team hasn’t distinguished its performance from peers’. Finally, CEO Jose Minaya has built a robust management team, but several of them are recent outside hires and so it will take time to see how they integrate with Minaya’s modernized vision for the firm.

Average

Parent

Nuveen Small Cap Select ETF

NSCS is an actively managed, non-transparent ETF that provides exposure to a global portfolio of small-cap stocks. The fund utilizes the Natixis/NYSE non-transparent model.

Nuveen Dividend Growth ETF

Nuveen Winslow Large-Cap Growth ESG ETF

The TIAA subsidiary is launching the ETFs after a two-year hiatus.

Nuveen Launches 3 Active ETFs

Today, August 5, Nuveen announced the launch of three new active ETF offerings, the Nuveen Small Cap Select Fund (NSCS), the Nuveen Santa Barbara Dividend Growth Fund (NDVG), and the Nuveen Winslow Large-Cap Growth ESG Fund (NWLG). All three of Nuveen's new ETFs are actively managed and semi-transparent, which means that holdings are only disclosed monthly.

Nuveen Launches Trio of Actively Managed ETFs

NEW YORK, Aug. 5, 2021 /PRNewswire/ -- Nuveen today launched its first suite of active semi-transparent Exchange Traded Funds (ETFs). Already available as mutual fund strategies, the three semi-transparent active ETFs combine the structural advantages of both the ETF and mutual fund wrappers, with the objective of helping clients meet their financial goals through the investment vehicle of their choice.

News for Nuveen Small Cap Select ETF ETF (NSCS)