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Is iShares Paris-Aligned Climate Optimized 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 Optimized MSCI USA ETF (PABU - Free Report) is a smart beta exchange traded fund launched on 04/08/2022.
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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $2.5 billion, this makes it one of the larger ETFs in the Style Box - All Cap Blend. PABU is managed by Blackrock. This particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.10% for this ETF, which makes it one of the least expensive products in the space.
PABU's 12-month trailing dividend yield is 0.92%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For PABU, it has heaviest allocation in the Information Technology sector --about 55.5% of the portfolio --while Real Estate and Telecom round out the top three.
Looking at individual holdings, Nvidia (NVDA) accounts for about 9.85% of total assets, followed by Microsoft (MSFT) and Apple (AAPL).
The top 10 holdings account for about 47.96% of total assets under management.
Performance and Risk
The ETF has added about 11.29% so far this year and is up roughly 11.74% in the last one year (as of 10/12/2026). In the past 52-week period, it has traded between $64.16 and $80.66
The fund has a beta of 1.07 and standard deviation of 16.25% for the trailing three-year period. With about 91 holdings, it effectively diversifies company-specific risk .
Alternatives
iShares Paris-Aligned Climate Optimized MSCI USA ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard ESG U.S. Stock ETF Shares (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 Shares has $13.68 billion in assets, iShares ESG Aware MSCI USA ETF has $18.26 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 Optimized 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 Optimized MSCI USA ETF (PABU - Free Report) is a smart beta exchange traded fund launched on 04/08/2022.
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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $2.5 billion, this makes it one of the larger ETFs in the Style Box - All Cap Blend. PABU is managed by Blackrock. This particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.10% for this ETF, which makes it one of the least expensive products in the space.
PABU's 12-month trailing dividend yield is 0.92%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For PABU, it has heaviest allocation in the Information Technology sector --about 55.5% of the portfolio --while Real Estate and Telecom round out the top three.
Looking at individual holdings, Nvidia (NVDA) accounts for about 9.85% of total assets, followed by Microsoft (MSFT) and Apple (AAPL).
The top 10 holdings account for about 47.96% of total assets under management.
Performance and Risk
The ETF has added about 11.29% so far this year and is up roughly 11.74% in the last one year (as of 10/12/2026). In the past 52-week period, it has traded between $64.16 and $80.66
The fund has a beta of 1.07 and standard deviation of 16.25% for the trailing three-year period. With about 91 holdings, it effectively diversifies company-specific risk .
Alternatives
iShares Paris-Aligned Climate Optimized MSCI USA ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard ESG U.S. Stock ETF Shares (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 Shares has $13.68 billion in assets, iShares ESG Aware MSCI USA ETF has $18.26 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.