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Is Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ) a Strong ETF Right Now?
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The Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ - Free Report) was launched on 06/28/2022, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Deutsche Bank Ag, USNZ has amassed assets over $252.20 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. USNZ, before fees and expenses, seeks to match the performance of the SOLACTIVE ISS ESG US NT ZR PATHWY ENH ID.
The Solactive ISS ESG United States Net Zero Pathway Enhanced Index comprised of large and mid-capitalization companies in the United States that meet certain environmental, social and governance criteria.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.10% for USNZ, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.10%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Apple Inc (AAPL - Free Report) accounts for about 8.85% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Nvidia Corp (NVDA.O).
The top 10 holdings account for about 37.75% of total assets under management.
Performance and Risk
The ETF has added roughly 4.15% so far this year and was up about 21.11% in the last one year (as of 02/21/2025). In the past 52-week period, it has traded between $31.81 and $38.80.
The fund has a beta of 1 and standard deviation of 15.64% for the trailing three-year period. With about 340 holdings, it effectively diversifies company-specific risk.
Alternatives
Xtrackers Net Zero Pathway Paris Aligned US Equity ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares ESG Aware MSCI USA ETF (ESGU - Free Report) tracks MSCI USA ESG Focus Index and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ - Free Report) tracks ----------------------------------------. IShares ESG Aware MSCI USA ETF has $14.27 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $23.64 billion. ESGU has an expense ratio of 0.15% and JEPQ charges 0.35%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ) a Strong ETF Right Now?
The Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ - Free Report) was launched on 06/28/2022, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Deutsche Bank Ag, USNZ has amassed assets over $252.20 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. USNZ, before fees and expenses, seeks to match the performance of the SOLACTIVE ISS ESG US NT ZR PATHWY ENH ID.
The Solactive ISS ESG United States Net Zero Pathway Enhanced Index comprised of large and mid-capitalization companies in the United States that meet certain environmental, social and governance criteria.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.10% for USNZ, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.10%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Apple Inc (AAPL - Free Report) accounts for about 8.85% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Nvidia Corp (NVDA.O).
The top 10 holdings account for about 37.75% of total assets under management.
Performance and Risk
The ETF has added roughly 4.15% so far this year and was up about 21.11% in the last one year (as of 02/21/2025). In the past 52-week period, it has traded between $31.81 and $38.80.
The fund has a beta of 1 and standard deviation of 15.64% for the trailing three-year period. With about 340 holdings, it effectively diversifies company-specific risk.
Alternatives
Xtrackers Net Zero Pathway Paris Aligned US Equity ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares ESG Aware MSCI USA ETF (ESGU - Free Report) tracks MSCI USA ESG Focus Index and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ - Free Report) tracks ----------------------------------------. IShares ESG Aware MSCI USA ETF has $14.27 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $23.64 billion. ESGU has an expense ratio of 0.15% and JEPQ charges 0.35%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.