SCHE Offers Higher Yield and Lower Fees Than NZAC

The Schwab Emerging Markets Equity ETF (NYSEMKT:SCHE) stands out for its ultra-low cost, higher yield, and deep emerging markets roster, while State Street SPDR MSCI ACWI Climate Paris Aligned ETF (NASDAQ:NZAC) brings a global scope, ESG focus, and a pronounced technology lean.

SCHE and NZAC both track broad equity markets, but with different mandates: SCHE targets emerging economies, while NZAC covers developed and emerging markets with an added climate-focused ESG screen. This comparison looks at cost, performance, risk, portfolio makeup, and practical quirks to help investors weigh which may fit their goals.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.

SCHE is more affordable on fees and offers a higher payout, with a 0.07% expense ratio and 2.7% yield versus NZAC’s 0.12% expense and 1.8% yield.

Performance & risk comparison

What's inside

NZAC tracks a global index that applies a climate-focused ESG screen, aiming to reduce carbon exposure while increasing sustainability alignment. The fund holds 672 stocks spanning both developed and emerging markets, with a strong tilt to technology (30%) and notable allocations to cash and financials. Top holdings include Nvidia Corp (NASDAQ:NVDA), Apple Inc (NASDAQ:AAPL), and Microsoft Corp (NASDAQ:MSFT). The fund has been available for 11.4 years, offering relatively seasoned exposure for ESG-minded investors.

In contrast, SCHE focuses strictly on emerging markets, holding over 2,200 stocks with sector weights led by technology (27%), financial services (22%), and consumer cyclicals (11%). Its largest positions are Taiwan Semiconductor Manufacturing (2330.TW), Tencent Holdings Ltd (0700.HK), and Alibaba Group Holding Ltd (9988.HK). SCHE does not use an ESG screen or other notable portfolio quirks.

What this means for investors

These two funds both claim broad equity exposure, but they're doing different jobs. SCHE is a pure emerging markets play — over 2,200 stocks, dirt-cheap at 0.07%, and a 2.7% yield that's genuinely competitive. If you want low-cost access to economies like Taiwan, China, and South Korea, it's hard to beat on price. NZAC is a different animal. It's global — developed plus emerging — but it runs a climate screen that meaningfully reshapes the portfolio. The result is a fund that looks a lot like a tech-tilted developed market fund: Nvidia, Apple, and Microsoft as top holdings, 30% in technology, and a 0.12% expense ratio for the privilege. The ESG overlay is doing real work here, not just marketing. The practical question is what you're actually solving for. SCHE gives you emerging market concentration with maximum cost efficiency. NZAC gives you global diversification with a climate tilt — but at that portfolio composition, investors should go in knowing it behaves more like a U.S.-heavy growth fund than a truly global one. Neither is wrong. They're just answering different questions.

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Seena Hassouna has positions in Apple and Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.