VT vs. NZAC: Which Global ETF Is the Better Buy for Long-Term Investors?

The Vanguard Total World Stock ETF (NYSEMKT:VT) provides broad global exposure at a lower cost, while the State Street SPDR MSCI ACWI Climate Paris Aligned ETF (NASDAQ:NZAC) prioritizes climate-related risk mitigation through specific environmental screens.

Both funds offer a gateway to international equity markets, but they serve different investor priorities. While VT aims to capture the entire investable global market, NZAC filters that stock universe through the lens of the Paris Agreement.

Snapshot (cost & size)

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

VT is less expensive, with an expense ratio of 0.06% -- half of NZAC’s 0.12% annual fee. However, NZAC offers a higher dividend yield of 1.75% compared to VT’S 1.59%.

Performance & risk comparison

What's inside

Launched in 2008, VT diversifies across 10,024 stock holdings, tracking the performance of companies in both developed and emerging markets. Its top sector allocations include technology at 31.1%, financial services at 15.2%, and industrials at 11.4%. Its largest positions include Nvidia (NASDAQ:NVDA) at 4.2%, Apple (NASDAQ:AAPL) at 3.8%, and Microsoft (NASDAQ:MSFT) at 2.8%.

Launched in 2014, NZAC is more concentrated with 629 holdings -- using an ESG screen to satisfy the requirements of the EU Paris Aligned Benchmark. Its sector exposure is also led by technology at 36.6%, followed by financial services at 15.4% and industrials at 9.7%. Its top holdings include the same three largest positions, with Nvidia at 5.9%, Apple at 4.9%, and Microsoft at 3.5%.

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What this means for investors

Choosing between VT and NZAC ultimately comes down to what you want your portfolio to do. VT is one of the most diversified single-fund options available anywhere. With exposure to more than 10,000 companies across developed and emerging markets, it's essentially a bet on global economic growth as a whole. That breadth, combined with a rock-bottom 0.06% expense ratio, makes it a compelling core holding for long-term investors who want simplicity and cost efficiency.

NZAC takes a different approach. By filtering holdings through the EU's Paris Aligned Benchmark, it tilts toward companies better positioned for a lower-carbon economy -- which appeals to investors who believe climate risk is also financial risk. The tradeoff is meaningful: fewer holdings (629 vs. 10,000+) and a higher expense ratio. That said, NZAC's slightly higher dividend yield and its heavier tech weighting -- 37% vs. VT's 31% -- may attract investors looking for income alongside a values-aligned strategy.

It's worth noting that both funds share the same top three holdings (Nvidia, Apple, and Microsoft), so the difference in day-to-day performance may feel smaller than the philosophical gap between them suggests. But over time, NZAC’S cost difference and concentration risk -- NZAC’s top 10 holdings represent 28% of the fund’s assets -- could matter, especially in a market environment that rewards broad, low-cost diversification.

For most buy-and-hold investors, VT's combination of global reach, low cost, and simplicity gives it a meaningful edge. NZAC is worth considering for those who want their investing dollars explicitly aligned with climate transition themes -- so long as you realize the inherent tradeoffs.

Andy Gould has positions in Apple and Nvidia and has the following options: long January 2027 $125 calls on Nvidia and short January 2027 $125 puts on Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.