
SimonSkafar
NUGO technique
Nuveen Development Alternatives ETF (NYSEARCA:NUGO) is an actively managed fund listed on 9/27/2021. It has a portfolio of 45 shares, a trailing 12-month yield of 0.13% and a complete expense ratio of 0.55%.
As described by Nuveen,
The Fund seeks long-term capital appreciation by means of a concentrated progress portfolio that primarily invests in U.S. corporations with market capitalizations of at the very least $1 billion. The funding group appears to be like for high-quality corporations that exhibit potential for engaging earnings progress, robust relative valuation, engaging money flows, and important long-term returns.
The fund may additionally make investments as much as 20% of belongings in non-U.S. issuers by means of American Depositary Receipts (“ADRs”) and shares listed on overseas markets. The fund’s turnover charge in the latest fiscal yr was 34%, which is kind of low for an actively managed fund.
NUGO portfolio
As of writing, the portfolio is virtually solely invested in U.S. corporations (about 98% of asset worth), principally in massive and mega caps (about 94% of belongings). This text will use as a benchmark the S&P 500 Development Index, represented by iShares S&P 500 Development ETF (IVW).
The heaviest sector is expertise (46.7%), adopted by shopper discretionary (14.9%), healthcare (11.3%) and communication (11.1%). Different sectors are under 7%. The sector breakdown is similar to the S&P 500 Development Index. In comparison with the benchmark, NUGO overweights healthcare and underweights industrials. It ignores actual property, and utilities as nicely.

NUGO sector breakdown (Chart: creator; information: Nuveen, iShares)
The portfolio may be very concentrated: the highest 10 corporations, listed within the subsequent desk with progress metrics, characterize 66.4% of asset worth (vs 57.6% in IVW). Microsoft has virtually the identical weight as within the benchmark (13.68% vs 13.45%), however Apple is considerably lighter (7.94% vs 12.69%).
Ticker |
Identify |
Weight% |
EPS progress %TTM |
EPS progress %5Y |
Gross sales Development %TTM |
Gross sales Development %5Y |
MSFT |
Microsoft Corp. |
13.68 |
11.28 |
35.37 |
7.50 |
13.98 |
NVDA |
NVIDIA Corp. |
9.25 |
222.20 |
7.65 |
57.07 |
22.66 |
AMZN |
Amazon.com, Inc. |
8.96 |
75.88 |
N/A |
10.32 |
23.64 |
AAPL |
Apple, Inc. |
7.94 |
0.45 |
15.55 |
-2.80 |
7.59 |
GOOGL |
Alphabet, Inc. |
6.38 |
3.56 |
38.33 |
5.62 |
20.40 |
META |
Meta Platforms, Inc. |
5.48 |
7.92 |
9.76 |
7.48 |
23.46 |
MA |
Mastercard, Inc. |
4.66 |
14.67 |
22.87 |
12.81 |
12.20 |
LLY |
Eli Lilly and Co. |
3.87 |
-18.63 |
107.35 |
9.69 |
4.53 |
AVGO |
Broadcom Inc. |
3.68 |
25.65 |
2.37 |
7.88 |
11.43 |
PANW |
Palo Alto Networks Inc. |
2.47 |
456.24 |
37.37 |
23.89 |
24.83 |
Fundamentals
NUGO is a little more costly than IVW relating to the worth/earnings ratio, as reported within the subsequent desk. Additionally it is considerably inferior to the benchmark in money circulation progress. Different valuation and progress metrics are related.
NUGO |
IVW |
|
P/E TTM |
34.29 |
31.52 |
Value/Ebook |
8.28 |
8.99 |
Value/Gross sales |
4.89 |
5.13 |
Value/Money Circulation |
21.41 |
21.13 |
Earnings progress |
21.09% |
21.20% |
Gross sales progress % |
15.67% |
17.28% |
Money circulation progress % |
10.62% |
14.96% |
Ebook-value progress % |
10.76% |
11.96% |
In my ETF critiques, dangerous shares are corporations with at the very least 2 purple flags amongst: dangerous Piotroski rating, detrimental ROA, unsustainable payout ratio, dangerous or doubtful Altman Z-score, excluding financials and actual property the place these metrics are unreliable. With this assumption, 3 shares out of 45 are dangerous within the portfolio: Boeing (BA), Intel (INTC) and DraftKings (DKNG). They weight solely 2.7% asset worth, which is a superb level.
In accordance with the calculation of my most well-liked high quality metrics (reported within the subsequent desk), portfolio high quality is considerably superior to the S&P 500 Index (SPY). The combination return on belongings is particularly spectacular.
NUGO |
SPY |
|
Atman Z-score |
12.56 |
3.66 |
Piotroski F-score |
6.4 |
5.7 |
ROA % TTM |
16.8 |
7.01 |
Efficiency
Since inception, NUGO has outperformed the expansion benchmark IVW, however lagged the broad index S&P 500, as plotted on the subsequent chart.

NUGO vs IVW, SPY, since inception (Searching for Alpha)
However, it has been one of the best performer by far during the last 12 months:

NUGO vs IVW, SPY, final 12 months (Searching for Alpha)
NUGO vs opponents
The subsequent desk compares traits of NUGO, IVW and the three largest U.S. fairness progress ETFs:
- Invesco QQQ Belief ETF (QQQ)
- Vanguard Development ETF (VUG)
- iShares Russell 1000 Development ETF (IWF)
NUGO |
IVW |
QQQ |
VUG |
IWF |
|
Inception |
9/27/2021 |
5/22/2000 |
3/10/1999 |
1/26/2004 |
5/22/2000 |
Expense Ratio |
0.55% |
0.18% |
0.20% |
0.04% |
0.19% |
AUM |
$2.89B |
$37.03B |
$244.82B |
$200.55B |
$83.52B |
Avg Each day Quantity |
$2.26M |
$175.30M |
$19.41B |
$306.92M |
$491.47M |
Holdings |
45 |
229 |
102 |
211 |
447 |
High 10 |
62.62% |
57.59% |
45.78% |
55.21% |
52.09% |
Turnover |
31.00% |
34.00% |
22.08% |
5.00% |
14.00% |
NUGO is the most recent, smallest (in belongings) and fewer liquid (in greenback quantity) of this group. It additionally has the very best payment and probably the most concentrated portfolio.
The subsequent chart compares whole returns since NUGO inception. The most effective performer is the Nasdaq 100 ETF QQQ, and NUGO is second to final.

NUGO vs opponents since 10/4/2021 (Searching for Alpha)
During the last 12 months, QQQ nonetheless is the winner and NUGO comes second shortly behind it.

NUGO vs opponents, final 12 months (Searching for Alpha)
Takeaway
Nuveen Development Alternatives ETF is an actively managed progress fund with a give attention to high quality. Like all progress funds, it’s significantly chubby in expertise. It’s barely inferior to the S&P 500 Development Index relating to valuation and money circulation progress, however high quality metrics are glorious. It’s much less diversified throughout holdings than the preferred progress ETFs. Its efficiency since inception is common relative to friends and turnover is kind of low for an actively managed fund, which doesn’t justify the considerably larger payment. Nonetheless, worth historical past is brief and will not characterize the fund’s long run potential. Anyway, till NUGO proves itself, buyers searching for publicity to the expansion investing type will doubtless desire the biggest and most liquid ETF on this class: QQQ.