IEMG Offers Broader Market Reach Than NZAC
Key Points
IEMG offers a higher yield and higher recent return, but has deeper historical drawdowns than NZAC.
NZAC applies an ESG screen focused on climate alignment, while IEMG tracks a broad emerging markets index.
IEMG is vastly larger and more liquid, holding nearly four times as many stocks as NZAC.
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The State Street SPDR MSCI ACWI Climate Paris Aligned ETF (NASDAQ:NZAC) emphasizes climate-focused Environmental, Social, and Governance (ESG) screening across global markets, while the iShares Core MSCI Emerging Markets ETF (NYSEMKT:IEMG) delivers broad emerging markets exposure with a higher yield and significantly greater assets under management.
Both NZAC and IEMG seek diversified global equity exposure, but differ in region, style, and focus. NZAC tilts toward climate-conscious investing, spanning developed and emerging markets; IEMG zeroes in on emerging markets, offering a more concentrated regional play. This comparison unpacks their costs, returns, risk, and portfolio makeup to help clarify the trade-offs.
Snapshot (cost & size)
| Metric | NZAC | IEMG |
|---|---|---|
| Issuer | SPDR | IShares |
| Expense ratio | 0.12% | 0.09% |
| 1-yr return (as of 2026-01-30) | 15.8% | 35.3% |
| Dividend yield | 1.9% | 2.5% |
| Beta | 1.06 | 0.63 |
| AUM | $183.2 million | $138.8 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-year return represents total return over the trailing 12 months.
IEMG is slightly more affordable in fees, charging 0.09% compared to NZAC’s 0.12%. IEMG also provides a higher trailing dividend yield by 0.6 percentage points, which may appeal to income-oriented investors.
Performance & risk comparison
| Metric | NZAC | IEMG |
|---|---|---|
| Max drawdown (5 y) | -28.29% | -37.16% |
| Growth of $1,000 over 5 years | $1,499 | $1,106 |
What's inside
IEMG holds 2,673 stocks across emerging markets, with a sector tilt toward technology (28%), financial services (21%), and consumer cyclicals (11%). Its largest positions are Taiwan Semiconductor Manufacturing (2330.SR), Samsung Electronics Ltd (005930.KS), and Tencent Holdings Ltd (0700.HK). The fund has a 13.3-year track record and no notable quirks or overlays, making it a straightforward way to access emerging market equities.
NZAC, by contrast, blends developed and emerging markets, but with an ESG screen focused on climate alignment. Its 688 holdings are led by Nvidia (NASDAQ:NVDA), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT), plus notable weights in financials and technology. The fund’s ESG tilt may appeal to those prioritizing sustainability within a global allocation.
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What this means for investors
Both funds offer international stock exposure, but IEMG check a few key boxes for investors. It provides a lower expense ratio, higher dividend yield, and better recent returns. This may appeal to investors who want to boost their dividend income.
While IEMG has more than doubled NZAC’s total return (including dividends) over the past year, NZAC has outperformed over the past five years. Since 2021, IEMG has returned 23%, trailing NZAC’s 57% return. That is quite significant and shows that NZAC may perform better across market cycles.
The difference in returns over the past five years highlights IEMG’s main weakness: it is dependent on emerging markets performing well. By comparison, NZAC’s trailing five-year return benefited from more exposure to U.S.-based tech stocks.
IEMG is better if you’re looking for a highly diversified international fund. However, NZAC may be better for an investor who wants to invest in climate-friendly companies while still gaining global exposure and growth.
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John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
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