Nuveen ESG Small-Cap ETF (NUSC) offers investors a way to participate in the Small Cap Growth market. Launched on December 13, 2016, it uses a smart beta strategy that prefers non-cap weighted indexes to aim for better market returns. This approach includes methods like equal-weighting and momentum-based weighting. The fund is managed by Nuveen and aims to reflect the TIAA ESG Small-Cap Index, boasting over $1.24 billion in assets. It includes shares from small-cap U.S. companies. NUSC has an expense ratio of 0.31% and a 12-month trailing dividend yield of 1.08%. The largest portion of the fund is in the Industrials sector, which accounts for 19.9% of its holdings. A noteworthy stock in this sector is Comfort Systems USA Inc, making up 1.34%. The top 10 holdings together comprise 9.99% of the total assets. In terms of performance, the ETF has risen by 5.86%, but it has decreased by 0.83% over the year as of November 2025. It has a beta of 1.11 and a three-year standard deviation of 19.77%, with around 445 holdings to help spread company-specific risks. Alternative options include the Vanguard ESG U.S. Stock ETF with $11.79 billion in assets and the iShares ESG Aware MSCI USA ETF with $15.33 billion, both offering lower costs. With the recent 5.86% gain this year contrasted with a slight loss over the past 12 months, we might be seeing a shift. A beta of 1.11 indicates this ETF is a bit more volatile than the market, providing chances for options traders. It’s worth considering if the recent positive trend can overcome the sluggishness of the past year. The fund’s significant 19.9% investment in the Industrials sector is crucial—especially since the ISM Manufacturing PMI for October 2025 showed a slight contraction at 49.8. This economic challenge calls for caution. Traders might consider buying puts or setting up put spreads to guard against possible downturns in manufacturing activity, protecting their portfolios if economic data worsens by year-end. Financials is another significant sector to monitor closely, especially during the Federal Reserve’s meeting in December. If they indicate any future interest rate cuts in 2026, it could benefit small-cap financials. The current uncertainty also makes straddles an appealing strategy to capture steep market moves based on the Fed’s announcements. The fund’s three-year standard deviation of 19.77% highlights its history of price fluctuations. Currently, the CBOE Volatility Index (VIX) is around 17, showing implied volatility isn’t at extreme levels, meaning options aren’t overly pricey. This creates a favorable situation for taking positions that could benefit from rising volatility anticipated with year-end economic reports. Small-caps have often outperformed large-caps after periods of economic uncertainty, a trend seen after the 2020 downturn. Following a period of lagging behind the S&P 500 throughout most of 2024 and early 2025, a recovery could be on the horizon for small-caps. We might explore long-dated call options as a way to capitalize on a possible small-cap rally as we approach the new year.

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