NZAC and URTH Both Offer International Exposure, But With Differing Goals and Diversification

Both the SPDR MSCI ACWI Climate Paris Aligned ETF (NASDAQ:NZAC) and iShares MSCI World ETF (NYSEMKT:URTH) target global equities, but they differ on cost, ESG exposure, and market coverage, making each more attractive to different investor priorities.

NZAC offers lower costs and a climate-focused tilt, while URTH provides broader developed market coverage and much greater assets under management.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.

NZAC is more affordable with a lower annual expense ratio, while both funds currently offer nearly identical dividend yields. URTH’s higher fee comes with broader market coverage and much larger assets under management.

Performance & risk comparison

What's inside

NZAC tracks a climate-aligned index, aiming to reduce exposure to climate risks and increase allocation to sustainable opportunities. The fund holds 687 stocks, with a sector tilt toward technology (31%), financial services (17%), and industrials (11%).

Its top holdings include Nvidia, Apple, and Microsoft, each weighted at less than 6% of total assets. The fund has been in existence for 11 years and applies an ESG screen, which may be relevant for those seeking to align investments with climate objectives.

URTH, meanwhile, draws from a broader developed markets universe, holding 1,322 stocks and allocating 27% toward technology, 16% to financial services, and 11% to industrials.

Its largest positions mirror NZAC’s, but without an ESG overlay or emerging markets exposure. The fund’s higher assets under management may translate to greater liquidity and trading ease for larger positions.

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Foolish take

NZAC and URTH both offer exposure to a wide variety of domestic and international stocks, but they differ primarily in their goals and portfolios.

NZAC is focused specifically on climate-friendly investments. It aims to provide access to sustainable investments and incorporates guidelines from the Taskforce on Climate Related Financial Disclosures (TCFD) into its strategy. It's designed for investors seeking to "address climate change in a holistic way," and it makes an effort to reduce exposure to risks associated with climate change.

URTH is more focused on global stocks in general, containing holdings from developed markets around the world. It's not as environmentally-focused as NZAC, but it can provide some extra stability. With more holdings and slightly less of a tilt toward technology, URTH is more diversified.

Because URTH only contains stocks from developed markets -- compared to NZAC's exposure to both developed and emerging markets -- it can potentially be less volatile. However, that could also potentially limit its returns, as emerging markets stocks can sometimes experience faster-than-average growth.

Where you choose to buy will primarily depend on your investing goals. For those looking to invest in more climate-friendly, sustainable stocks, NZAC is designed for environmentally focused investors. URTH, on the other hand, can be a better choice for those seeking greater diversification in stocks from developed markets worldwide.

Glossary

ETF: Exchange-traded fund; a pooled investment that trades on stock exchanges like a single stock.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges its investors.
ESG screen: A process that selects or excludes investments based on environmental, social, and governance criteria.
Assets under management (AUM): The total market value of all assets managed by a fund.
Beta: A measure of a fund's volatility compared to the overall market, typically the S&P 500.
Dividend yield: Annual dividends paid by a fund, expressed as a percentage of its share price.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a period.
Climate Paris Aligned: Investment strategy aiming to align with the Paris Agreement's climate goals, reducing carbon exposure.
Developed markets: Economies considered advanced in terms of income, infrastructure, and regulatory environment.
Liquidity: How easily a fund's shares can be bought or sold without affecting its price.
Sector tilt: When a fund allocates more to certain industries or sectors than the overall market.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.

Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.