NZAC vs. IEFA: You Might Already Have Their Ingredients in Your Portfolio

State Street SPDR MSCI ACWI Climate Paris Aligned ETF (NASDAQ:NZAC) stands out for its tech-heavy, climate-focused portfolio and slightly higher 1-year return, while iShares Core MSCI EAFE ETF (NYSEMKT:IEFA) offers much higher yield, massive scale, and the broadest liquidity in the comparison.

NZAC and IEFA are both global equity exchange-traded funds, but their exposures and strategies differ. NZAC tracks an index with a climate and ESG overlay, capturing large- and mid-cap stocks worldwide, including the U.S. and emerging markets. IEFA, in contrast, focuses on developed markets outside the U.S. and Canada, aiming for comprehensive international coverage. This comparison explores how their cost, yield, performance, risk, and underlying holdings stack up.

Snapshot (cost & size)

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

IEFA is more affordable on expense ratio and delivers a substantially higher payout, with its yield 1.5 percentage points above NZAC. While NZAC’s annual fee is already low, the difference may appeal to cost-focused or income-seeking investors.

Performance & risk comparison

What's inside

IEFA tracks a developed markets index excluding the U.S. and Canada, with 2,626 holdings as of its 13.5-year history. Sector allocation leans toward financial services (23%), industrials (20%), and healthcare (10%). Top names include Asml Holding Nv (AMS:ASML.AS), Astrazeneca Plc (LSE:AZN.L), and Hsbc Holdings Plc (LSE:HSBA.L), reflecting a strong European and Asian developed-markets tilt. IEFA’s sheer scale and liquidity stand out, and there are no notable structural quirks.

NZAC is built around a climate-conscious ESG screen, with a portfolio that allocates about a third of its weight to information technology and roughly 17% to financials. Its top holdings—Nvidia Corp (NASDAQ:NVDA), Apple Inc (NASDAQ:AAPL), and Microsoft Corp (NASDAQ:MSFT) — show a strong U.S. tech orientation. The fund also covers emerging markets and U.S. stocks, offering broader global exposure than IEFA.

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What this means for investors

IEFA and NZAC are both global equity funds, but before you add either to the mix, think of your portfolio as a kitchen pantry and check the shelves to see how much of these ETFs you've already got. IEFA is a workhorse international fund — developed markets ex-U.S., roughly 2,600 holdings, low cost, and a yield that's 1.5 percentage points higher than NZAC's. Financials and industrials dominate the sector mix, and the top names are European and Asian stalwarts. It's an ingredient most U.S.-focused portfolios are actually missing. NZAC is a different recipe entirely: a climate and ESG screen layered over a genuinely global portfolio that includes U.S. stocks and emerging markets, with about a third of the fund in information technology. If your portfolio already leans heavily on U.S. tech, NZAC brings familiar ingredients, not new ones. IEFA is the cleaner complement — almost no overlap with a typical domestic stock mix. The core trade-off is straightforward: IEFA for yield, liquidity, and true international diversification; NZAC if the climate overlay matters to you and you're comfortable with tech exposure you may already own, either individually or in other index funds and ETFs. Like food, investing comes down to personal taste — and both of these might have a place in the right financial kitchen.

Seena Hassouna has positions in Apple and Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.