NZAC vs. ACWX: One Fund Screens for Climate Goals, One Excludes the U.S.

The SPDR MSCI ACWI Climate Paris Aligned ETF (NASDAQ:NZAC) stands out for its lower cost and tech tilt, while the iShares MSCI ACWI ex US ETF (NASDAQ:ACWX) offers a higher yield, greater international diversification, and significantly more assets under management.

Both NZAC and ACWX track global equities, but NZAC integrates climate-focused screening and includes U.S. stocks, whereas ACWX holds only non-U.S. companies. This comparison weighs their costs, sector exposures, recent performance, and liquidity to help investors understand which may better fit their goals.

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.

ACWX costs more than NZAC, with an expense ratio more than double that of the climate-focused fund, but it also offers a higher yield and could appeal to those seeking more income from their international allocation.

Performance & risk comparison

What's inside

ACWX holds around 1,700 stocks and has operated for 17 years, focusing on companies outside the U.S. Its largest sector weights are financial services (25%), technology (15%), and industrials (15%), with top positions in Taiwan Semiconductor Manufacturing (NYSE:TSM), Tencent (OTC:TCEHY), and ASML Holding (NASDAQ:ASML). This broad reach and long track record may appeal to those seeking deep international diversification without climate or ESG overlays.

NZAC, by contrast, tilts more heavily toward technology (35%) and also includes U.S. giants such as Nvidia (NASDAQ:NVDA), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT). It applies an ESG screen aligned with the Paris climate goals and tracks the MSCI ACWI Climate Paris Aligned Index, offering investors a way to address climate risk while maintaining global equity exposure.

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What this means for investors

Both of these ETFs offer global equity exposure, but NZAC is designed around climate alignment while ACWX focuses purely on geography by excluding U.S. stocks. Investors choosing between the two need to decide whether climate screening or a dedicated international allocation better fits their portfolio strategy.

NZAC holds global companies that meet Paris Climate Agreement targets, screening out fossil fuels and controversial weapons while maintaining broad diversification across developed and emerging markets. The fund charges a 0.12% expense ratio and yields 1.9%, delivering ESG-focused exposure without sacrificing U.S. market participation.

ACWX tracks large- and mid-cap stocks across developed and emerging markets outside the United States, offering investors pure international exposure. With a 0.32% expense ratio, ACWX costs more than double what NZAC charges -- meaning you'll pay higher fees each year. However, ACWX's 2.7% dividend yield delivers considerably more income from the fund's $8.4 billion in assets, potentially offsetting those extra costs for investors prioritizing cash flow.

Ultimately, the choice here hinges on portfolio construction: NZAC suits those seeking complete global coverage with climate considerations, while ACWX works best for those building separate U.S. and international allocations who prioritize dividend income over cost efficiency.

Glossary

ETF: Exchange-traded fund that holds a basket of securities and trades like a stock.
Expense ratio: Annual fund fee, expressed as a percentage of assets, deducted from investor returns.
Dividend yield: Annual dividends paid by a fund divided by its current share price.
Beta: Measure of a fund’s volatility compared with a benchmark index, such as the S&P 500.
AUM: Assets under management; the total market value of all assets in the fund.
Max drawdown: The largest peak-to-trough decline in value over a specified period.
Growth of $1,000: Illustration showing how a $1,000 investment would have changed in value over time.
Sector weights: Percentage of a fund’s assets allocated to each industry sector, like technology or financials.
ESG screen: Criteria excluding or favoring companies based on environmental, social, and governance factors.
Paris-aligned: Investment approach designed to align with global climate goals set in the Paris Agreement.
Total return: Investment performance including price changes plus all dividends and distributions, assuming reinvestment.
Index: A rules-based basket of securities used to track or measure a specific market segment.

Sara Appino has positions in Apple, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends ASML, Apple, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, and Tencent. 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.