Nuveen is one of a number of traditional asset managers who have recently jumped into the world of exchange-traded funds. The Chicago-based company, which is an operating division of TIAA Global Asset Management, last year launched its first seven ETFs under the NuShares banner, followed by three new funds this year. The company says it expects to become a “significant” player in this space.
ETFA: Explain the thought process behind naming this suite of ETFs as “NuShares.” What are you trying to convey to investors?
Kremenstein: We wanted the name to have a clear tie to Nuveen, a respected and stable asset manager with strong market recognition, especially reputed for its established strategies in ESG, fixed income and real estate, while still differentiating the platform from the Nuveen active book. With this name, we could signal that we were building products based on the existing raw materials of a firm with a 100-plus year legacy and enabling liquid and low-cost access to our investment team’s expertise. The NuShares platform aims to deliver innovation through experience.
Kremenstein: NuShares is differentiated in that we know what we’re good at, and we stick to it—we’re not trying to be all things to all people. We are committed to creating products that seek to address voids in the marketplace and that will have a meaningful place in an increasingly crowded space. We also think about our products in the context of a whole portfolio, making sure that our products provide investors and advisors with the tools they need to build portfolios that meet their needs.
We think this is especially clear across our ESG suite—we were the first to bring asset class exposures in the ESG ETF space when we first launched a year ago, and since then have been committed to providing investors and advisors with a consistent ESG approach across a variety of asset classes enabling them to fulfill their asset allocation needs within an ESG framework. Last month we launched the NuShares ESG Emerging Markets Equity ETF (NUEM) and NuShares ESG International Developed Markets Equity ETF (NUDM), thereby creating the first full suite of equity ESG ETFs that allow investors to build a global equity portfolio without having to sacrifice their responsible investing goals.
Kremenstein: A focus on ESG-related offerings was an obvious choice for us when we started the NuShares lineup given the established reputation and success of our firm’s other ESG strategies and long track record in the responsible-investment space. We wanted to leverage this existing expertise and to offer additional ESG solutions that are both investable and accessible to all investors. Responsible Investment is at the core of our asset management DNA which began back in the 1970’s executing the mission of our parent company, TIAA. We now have fully $650 billion of our firm’s assets managed in accordance with the U.N.’s Principles of Responsible Investing to which we are a founding signatory.
We’ve had strong demand for our ESG ETF products, and that demand is not slowing down any time soon. When clients care about ESG, they want it to be a core part of asset allocation, and across all asset classes. We’re hearing from advisors every day that their clients are demanding products that not only deliver solid returns, but also align with their values. Especially as millennials continue to have a greater influence in the marketplace, ESG will be an increasing priority and it will be pertinent for advisors to offer these solutions.
We’re very pleased with our performance, which has allowed us to continue to home in on and expand our ESG ETF offerings up to seven products. We will continue to keep an eye on opportunities within the ESG space to see how we can expand these offerings to ensure that clients can satisfy all allocation needs while maintaining their ESG principles.
Kremenstein: While ESG is of course a focus, as are our fixed income and real estate products, we are always looking for new opportunities to apply what Nuveen excels at to meet untapped client demand. The NuShares Enhanced Yield U.S. Aggregate Bond ETF (NUAG) was the first NuShares ETF product [launched September 2016] and is a key product within the NuShares brand. Nuveen is well known as a fixed income and real asset manager, and we equally want to capitalize on the strength of those products and existing market recognition. 
Martin Kremenstein, who heads Nuveen’s NuShares ETF effort, shared his thoughts on the company’s goals.
ETFA: How is NuShares trying to differentiate its ETFs in the marketplace?
ETFA: Why the focus on ESG-related funds, and is there enough demand for this to hang your hat on? For example, among the seven ESG-focused ETFs launched since last December, their respective AUMs range from $7 million to $17 million. Are you pleased with that?
ETFA: Ultimately, do you expect NuShares to always lead with its ESG focus?