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Is Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ) a Strong ETF Right Now?
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Making its debut on 06/28/2022, smart beta exchange traded fund Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ - Free Report) provides investors 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
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 managed by Deutsche Bank Ag, and has been able to amass over $207.44 million, which makes it one of the average sized ETFs in the Style Box - All Cap Blend. Before fees and expenses, this particular fund 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.10% for this ETF, which makes it one of the least expensive products in the space.
USNZ's 12-month trailing dividend yield is 1.10%.
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.
Taking into account individual holdings, Apple Inc (AAPL - Free Report) accounts for about 9.31% of the fund's total assets, followed by Nvidia Corp (NVDA.O) and Microsoft Corp (MSFT - Free Report) .
USNZ's top 10 holdings account for about 37.98% of its total assets under management.
Performance and Risk
Year-to-date, the Xtrackers Net Zero Pathway Paris Aligned US Equity ETF return is roughly 17.10% so far, and is up about 27.33% over the last 12 months (as of 08/16/2024). USNZ has traded between $26.25 and $36.82 in this past 52-week period.
The ETF has a beta of 1.01 and standard deviation of 16.48% for the trailing three-year period. With about 356 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 $12.75 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $15.40 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?
Making its debut on 06/28/2022, smart beta exchange traded fund Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ - Free Report) provides investors 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
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 managed by Deutsche Bank Ag, and has been able to amass over $207.44 million, which makes it one of the average sized ETFs in the Style Box - All Cap Blend. Before fees and expenses, this particular fund 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.10% for this ETF, which makes it one of the least expensive products in the space.
USNZ's 12-month trailing dividend yield is 1.10%.
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.
Taking into account individual holdings, Apple Inc (AAPL - Free Report) accounts for about 9.31% of the fund's total assets, followed by Nvidia Corp (NVDA.O) and Microsoft Corp (MSFT - Free Report) .
USNZ's top 10 holdings account for about 37.98% of its total assets under management.
Performance and Risk
Year-to-date, the Xtrackers Net Zero Pathway Paris Aligned US Equity ETF return is roughly 17.10% so far, and is up about 27.33% over the last 12 months (as of 08/16/2024). USNZ has traded between $26.25 and $36.82 in this past 52-week period.
The ETF has a beta of 1.01 and standard deviation of 16.48% for the trailing three-year period. With about 356 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 $12.75 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $15.40 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.