NZAC vs. URTH: How A Climate-Focused ETF Matches Up With An International Powerhouse

Both funds track global equities, but the iShares MSCI World ETF (NYSEMKT:URTH) focuses on developed markets, while the SPDR MSCI ACWI Climate Paris Aligned ETF (NASDAQ:NZAC)follows an index designed to align with the Paris Agreement, an international treaty that aims to help mitigate climate change. This comparison breaks down their key differences in cost, performance, risk, and portfolio makeup to help clarify which approach may appeal to different investors.

Snapshot (cost & size)

*Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns.

NZAC is more affordable to hold, with a 0.12% expense ratio compared to 0.24% for URTH, and it also pays a slightly higher dividend yield, which may appeal to cost-conscious or income-focused investors.

Performance & risk comparison

What's inside

NZAC targets companies that meet climate-aligned criteria, providing investors with exposure to efforts aimed at reducing climate risks. It holds 729 stocks, with technology accounting for 32% of assets, followed by financial services at 16%, and industrials at 10%. Top positions include Nvidia (NASDAQ:NVDA) at 5.31%, Apple (NASDAQ:AAPL) at 4.70%, and Microsoft (NASDAQ:MSFT) at 4.06%. The fund has been in operation for over 11 years and incorporates an ESG screen as a key feature, which helps evaluate which companies align with relevant sustainability themes.

URTH, by contrast, focuses on developed markets and holds 1,343 stocks, spreading its assets across technology (28%), financial services (16%), and industrials (10%). Its largest holdings are Nvidia, Apple, and Microsoft, essentially identical to NZAC. However, URTH does not use ESG screens or include emerging markets, resulting in broader developed-market exposure and a deeper stock pool.

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What this means for investors

With the emerging market primarily consisting of tech companies, and many of the tech giants already passing ESG screens, many of the holdings, especially the top ones, overlap across each ETF. Therefore, it can be challenging to say one of these ETFs is better than the other. However, that doesn’t mean investing in URTH is a strategy that’s just as sustainability-focused as investing in NZAC.

There’s a reason NZAC has over 600 fewer holdings than the emerging markets ETF, as every single company in the NZAC’s holdings undergoes an evaluation to see if it shares the sustainability goals of the Paris Agreement. Eco-friendly investors should be aware that many companies in the bottom half of URTH’s total holdings may either be actively pursuing or have no current intention to undergo ESG screening.

What shouldn’t go unnoticed among both ETFs is that they both offer exposure to international companies, with both funds holding top investments in companies based worldwide, including the U.S., Taiwan, the Netherlands, and Canada. Ultimately, for a broader investment, URTH is ideal, while NZAC is the cheaper and sustainability-focused option.

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 investors pay to own a fund.
Dividend yield: Annual dividends paid by a fund, expressed as a percentage of its current price.
Beta: A measure of a fund's volatility compared to the overall market, typically the S&P 500.
AUM: Assets under management; the total market value of assets a fund manages.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a period.
ESG screen: Criteria used to include or exclude investments based on environmental, social, and governance factors.
Paris Aligned: Refers to investment strategies designed to support climate goals set by the Paris Agreement.
Developed markets: Countries with established, stable economies and advanced financial systems.
Emerging markets: Nations with developing economies that may offer higher growth but more risk.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.
Holdings: The individual securities or assets owned within a fund or portfolio.

Adé Hennis has positions in Apple 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.