Go Big or Go Green: Should You Buy SPGM's Broad Diversification or NZAC's Climate Focus?

Both SPDR MSCI ACWI Climate Paris Aligned ETF (NASDAQ:NZAC) and SPDR Portfolio MSCI Global Stock Market ETF (NYSEMKT:SPGM) offer global equity exposure, but with different priorities: NZAC layers on a climate-focused ESG screen, while SPGM emphasizes broad, low-cost access to the global stock market across all capitalizations. Each fund's cost, risk, holdings, and quirks may appeal to different investors.

SPDR Portfolio MSCI Global Stock Market ETF stands out for its broader diversification and larger assets under management, while SPDR MSCI ACWI Climate Paris Aligned ETF tilts toward climate-focused ESG screening and slightly higher technology exposure.

Snapshot (cost & size)

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

SPDR Portfolio MSCI Global Stock Market ETF is more affordable on expenses, with a 0.09% fee compared to 0.12% for SPDR MSCI ACWI Climate Paris Aligned ETF. Both funds yield between 2.8% and 2.9%. The cost difference may appeal to fee-conscious investors building a long-term core position.

Performance & risk comparison

What's inside

SPDR Portfolio MSCI Global Stock Market ETF is a broad-market tracker with a 13.8-year history and about 2,890 holdings. It covers technology (26%), financial services (17%), and industrials (12%) with top positions in Nvidia, Apple, and Microsoft. Its lack of ESG screening or other overlays means its portfolio mirrors the global equity market without thematic tilts or screens.

SPDR MSCI ACWI Climate Paris Aligned ETF, by contrast, applies an ESG screen focused on climate transition risks and opportunities, following the criteria of the Paris Aligned Benchmark. Its 687 holdings also emphasize technology (31%), financial services (17%), and industrials (11%), with a similar top-three lineup: Nvidia, Apple, and Microsoft. The climate overlay may appeal to investors wanting explicit sustainability integration.

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Foolish take

ETF investing can be a great way to gain exposure to broad or specific market trends without the effort and risk involved in picking individual stocks. SPGM is a low-cost broad-market ETF that covers nearly the entire investable universe, across large-, mid-, and small-cap companies in both developed and emerging markets.

NZAC is a much smaller, much more targeted investment in companies that meet an environmental benchmark. The fund is designed to exceed the minimum standards for a "Paris-Aligned Benchmark," holding companies that meet the criteria of the Paris Agreement to limit the increase in the global average temperature to well below 2 degrees Celsius above pre-industrial levels. NZAC is a great example of an ESG (environmental, social, and governance) investment, focusing not only on financial performance, but also societal impact.

Despite the massive size disparity, the funds have performed similarly over the last year, with SPGM returning 16.36% and NZAC returning 13.5%. That's due to the fact that the top holdings of both funds are the same three tech giants, which have been largely driving the market's performance for the past few years. The funds also offer similar dividend yields and low expense ratios.

Large ETFs that track the entire stock market, either in the U.S. or the world, are often good core holdings for the foundation of a portfolio. In this case, because SPGM also covers a range of market caps and market types, it naturally diversifies against risk. Investors interested in ESG principles, or who believe that practices that are good for the climate are also good for business, may want to look further into a more targeted ETF like NZAC.

Glossary

ETF: Exchange-traded fund; a pooled investment that trades on stock exchanges like a single stock.
Expense ratio: Annual fee, expressed as a percentage, that a fund charges to cover operating costs.
Drawdown: The maximum observed loss from a fund's peak value to its lowest point over a specific period.
AUM: Assets under management; the total market value of assets a fund manages on behalf of investors.
ESG screen: Criteria used to include or exclude investments based on environmental, social, and governance factors.
Paris Aligned Benchmark: An index designed to align investments with the climate goals of the Paris Agreement.
Beta: A measure of a fund's volatility compared to the overall market, often the S&P 500.
Dividend yield: Annual dividends paid by a fund as a percentage of its current price.
Holdings: The individual stocks or assets owned within a fund or portfolio.
Core position: A foundational investment intended to be a long-term, stable part of a portfolio.
Thematic tilt: An investment strategy that emphasizes specific themes, such as technology or sustainability, within a portfolio.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.

Sarah Sidlow has positions in Apple, Microsoft, and Nvidia. 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.