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Is iShares Paris-Aligned Climate MSCI USA ETF (PABU) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - All Cap Blend category of the market, the iShares Paris-Aligned Climate MSCI USA ETF (PABU - Free Report) is a smart beta exchange traded fund launched on 04/08/2022.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Blackrock. It has amassed assets over $2.2 billion, making it one of the larger ETFs in the Style Box - All Cap Blend. PABU seeks to match the performance of the MSCI USA CLMT PARIS ALGN BNC EXT SLCT ID before fees and expenses.
The MSCI USA Climate Paris Aligned Benchmark Extended Select Index composed of U.S. large & mid-capitalization stocks designed to be compatible with the objectives of the Paris Agreement by following a decarbonization trajectory, reducing exposure to climate-related transition & physical risks & increasing exposure to companies favourably positioned for the transition to a low-carbon economy.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.10%.
PABU's 12-month trailing dividend yield is 0.98%.
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.
PABU's heaviest allocation is in the Information Technology sector, which is about 39.5% of the portfolio. Its Financials and Healthcare round out the top three.
When you look at individual holdings, Nvidia Corp (NVDA) accounts for about 8.69% of the fund's total assets, followed by Microsoft Corp (MSFT) and Apple Inc (AAPL).
PABU's top 10 holdings account for about 42.51% of its total assets under management.
Performance and Risk
The ETF has gained about 4.69% and is up about 13% so far this year and in the past one year (as of 07/21/2025), respectively. PABU has traded between $53.19 and $67.84 during this last 52-week period.
PABU has a beta of 1.04 and standard deviation of 18.31% for the trailing three-year period. With about 179 holdings, it effectively diversifies company-specific risk .
Alternatives
iShares Paris-Aligned Climate MSCI USA 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.
Vanguard ESG U.S. Stock ETF (ESGV) tracks FTSE US ALL CAP CHOICE INDEX and the iShares ESG Aware MSCI USA ETF (ESGU) tracks MSCI USA ESG Focus Index. Vanguard ESG U.S. Stock ETF has $10.8 billion in assets, iShares ESG Aware MSCI USA ETF has $13.9 billion. ESGV has an expense ratio of 0.09% and ESGU changes 0.15%.
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 iShares Paris-Aligned Climate MSCI USA ETF (PABU) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - All Cap Blend category of the market, the iShares Paris-Aligned Climate MSCI USA ETF (PABU - Free Report) is a smart beta exchange traded fund launched on 04/08/2022.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Blackrock. It has amassed assets over $2.2 billion, making it one of the larger ETFs in the Style Box - All Cap Blend. PABU seeks to match the performance of the MSCI USA CLMT PARIS ALGN BNC EXT SLCT ID before fees and expenses.
The MSCI USA Climate Paris Aligned Benchmark Extended Select Index composed of U.S. large & mid-capitalization stocks designed to be compatible with the objectives of the Paris Agreement by following a decarbonization trajectory, reducing exposure to climate-related transition & physical risks & increasing exposure to companies favourably positioned for the transition to a low-carbon economy.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.10%.
PABU's 12-month trailing dividend yield is 0.98%.
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.
PABU's heaviest allocation is in the Information Technology sector, which is about 39.5% of the portfolio. Its Financials and Healthcare round out the top three.
When you look at individual holdings, Nvidia Corp (NVDA) accounts for about 8.69% of the fund's total assets, followed by Microsoft Corp (MSFT) and Apple Inc (AAPL).
PABU's top 10 holdings account for about 42.51% of its total assets under management.
Performance and Risk
The ETF has gained about 4.69% and is up about 13% so far this year and in the past one year (as of 07/21/2025), respectively. PABU has traded between $53.19 and $67.84 during this last 52-week period.
PABU has a beta of 1.04 and standard deviation of 18.31% for the trailing three-year period. With about 179 holdings, it effectively diversifies company-specific risk .
Alternatives
iShares Paris-Aligned Climate MSCI USA 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.
Vanguard ESG U.S. Stock ETF (ESGV) tracks FTSE US ALL CAP CHOICE INDEX and the iShares ESG Aware MSCI USA ETF (ESGU) tracks MSCI USA ESG Focus Index. Vanguard ESG U.S. Stock ETF has $10.8 billion in assets, iShares ESG Aware MSCI USA ETF has $13.9 billion. ESGV has an expense ratio of 0.09% and ESGU changes 0.15%.
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.