NZAC vs. URTH: Which Global ETF Is the Better Buy?

The State Street SPDR MSCI ACWI Climate Paris Aligned ETF (NASDAQ:NZAC) and the iShares MSCI World ETF (NYSEMKT:URTH) both offer investors a simple way to buy global stocks in a single fund. But while NZAC applies a strict climate screen and includes emerging markets, URTH sticks to a mix of developed-world giants with no such filter.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

NZAC is the cheaper of the two funds, charging a 0.12% expense ratio versus 0.24% for URTH. It also pays a higher dividend yield of 2.06%, compared with 1.40% for URTH.

Performance & risk comparison

Over the last five years, URTH has posted higher returns while also experiencing a modestly smaller maximum drawdown than NZAC.

What's inside

Launched in 2014, NZAC tracks an index designed to limit exposure to climate transition risk while working toward net-zero goals, and applies an ESG screen that meets Paris Aligned Benchmark standards. The fund spreads its investments across 624 holdings, led by Nvidia (NASDAQ:NVDA) at 5.7%, Apple (NASDAQ:AAPL) at 4.6%, and Microsoft (NASDAQ:MSFT) at 2.9%. Its top sectors include technology at 36.6%, financial services at 16.2%, and healthcare at 9.2%.

URTH casts a wider net, holding 1,284 stocks across developed markets, with no climate or ESG filter applied. Its top three holdings are identical to NZAC’s -- including Nvidia at 5.2%, Apple at 4.8%, and Microsoft at 3.0%. Its sector mix is slightly less tech-heavy, with 30.9% in technology, 15.7% in financial services, and 11.4% in industrials. URTH was launched in 2012.

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What this means for investors

This comparison illustrates a trade-off most ETF investors eventually face: cost and income versus performance. NZAC's lower expense ratio and higher yield are real advantages, and for investors who specifically want their global stock exposure to come with a climate mandate, that screen is the whole point of owning the fund. But cheaper and higher-yielding hasn't translated into better returns here. URTH's stronger one-and five-year performance -- as well as its smaller drawdown -- suggests that sticking to established developed-market blue chips without an emerging-markets tilt or an ESG filter has been the better move.

That’s not a red flag for NZAC -- thematic and screened funds tend to behave differently than the broader market by design. Adding specific selection criteria changes a fund's profile, sometimes for the better and sometimes not.

These ETFs were simply built for different priorities. Investors who care most about aligning their holdings with climate goals may find NZAC's lower cost, higher dividend yield, and emerging-market coverage appealing. URTH, on the other hand, tends to suit investors who prioritize simpler global exposure -- those who already have emerging-market exposure elsewhere and would rather not duplicate it, or who are simply skeptical of how screening methodologies can impact a fund’s returns over time.

Andy Gould has positions in Apple and Nvidia and has the following options: long January 2027 $125 calls on Nvidia, short August 2026 $355 calls on Apple, and short January 2027 $125 puts on Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.