The State Street SPDR MSCI ACWI Climate Paris Aligned ETF (NASDAQ:NZAC) and the iShares MSCI World ETF (NYSEMKT:URTH) both offer investors a simple way to buy global stocks in a single fund. But while NZAC applies a strict climate screen and includes emerging markets, URTH sticks to a mix of developed-world giants with no such filter.
Snapshot (cost & size)
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
NZAC is the cheaper of the two funds, charging a 0.12% expense ratio versus 0.24% for URTH. It also pays a higher dividend yield of 2.06%, compared with 1.40% for URTH.
Performance & risk comparison
Over the last five years, URTH has posted higher returns while also experiencing a modestly smaller maximum drawdown than NZAC.
What’s inside
Launched in 2014, NZAC tracks an index designed to limit exposure to climate transition risk while working toward net-zero goals, and applies an ESG screen that meets Paris Aligned Benchmark standards. The fund spreads its investments across 624 holdings, led by Nvidia (NASDAQ:NVDA) at 5.7%, Apple (NASDAQ:AAPL) at 4.6%, and Microsoft (NASDAQ:MSFT) at 2.9%. Its top sectors include technology at 36.6%, financial services at 16.2%, and healthcare at 9.2%.
URTH casts a wider net, holding 1,284 stocks across developed markets, with no climate or ESG filter applied. Its top three holdings are identical to NZAC’s — including Nvidia at 5.2%, Apple at 4.8%, and Microsoft at 3.0%. Its sector mix is slightly less tech-heavy, with 30.9% in technology, 15.7% in financial services, and 11.4% in industrials. URTH was launched in 2012.
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What this means for investors
This comparison illustrates a trade-off most ETF investors eventually face: cost and income versus performance. NZAC’s lower expense ratio and higher yield are real advantages, and for investors who specifically want their global stock exposure to come with a climate mandate, that screen is the whole point of owning the fund. But cheaper and higher-yielding hasn’t translated into better returns here. URTH’s stronger one-and five-year performance — as well as its smaller drawdown — suggests that sticking to established developed-market blue chips without an emerging-markets tilt or an ESG filter has been the better move.
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