Designed to provide broad exposure to the Style Box - All Cap Blend category of the market, the Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ Quick QuoteUSNZ - Free Report) is a smart beta exchange traded fund launched on 06/28/2022.

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.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

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

Because the fund has amassed over $256.38 million, this makes it one of the average sized ETFs in the Style Box - All Cap Blend. USNZ is managed by Deutsche Bank Ag. This particular fund seeks to match the performance of the SOLACTIVE ISS ESG US NT ZR PATHWY ENH ID before fees and expenses.

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.

Annual operating expenses for USNZ are 0.10%, which makes it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.07%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 9.19% of total assets, followed by Nvidia Corp (NVDA.O) and Apple Inc (AAPL).

Its top 10 holdings account for approximately 43.13% of USNZ's total assets under management.

Performance and Risk

So far this year, USNZ has added about 10.86%, and is up roughly 13.15% in the last one year (as of 08/28/2025). During this past 52-week period, the fund has traded between $31.29 and $41.02.

USNZ has a beta of 1.00 and standard deviation of 16.84% for the trailing three-year period. With about 318 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.

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 $11.16 billion in assets, iShares ESG Aware MSCI USA ETF has $14.3 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.