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Is Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ) 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 Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ - 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.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
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
Because the fund has amassed over $227.52 million, this makes it one of the average sized ETFs in the Style Box - All Cap Blend. USNZ is managed by Deutsche Bank Ag. Before fees and expenses, USNZ 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.
Annual operating expenses for this ETF are 0.10%, making 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
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.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 8.80% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Nvidia Corp (NVDA.O).
USNZ's top 10 holdings account for about 36.38% of its total assets under management.
Performance and Risk
Year-to-date, the Xtrackers Net Zero Pathway Paris Aligned US Equity ETF has added roughly 22.72% so far, and is up about 37.30% over the last 12 months (as of 10/16/2024). USNZ has traded between $26.25 and $37.92 in this past 52-week period.
USNZ has a beta of 1.01 and standard deviation of 16.18% for the trailing three-year period. With about 339 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 $13.53 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $17.09 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?
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 - 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.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
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
Because the fund has amassed over $227.52 million, this makes it one of the average sized ETFs in the Style Box - All Cap Blend. USNZ is managed by Deutsche Bank Ag. Before fees and expenses, USNZ 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.
Annual operating expenses for this ETF are 0.10%, making 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
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.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 8.80% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Nvidia Corp (NVDA.O).
USNZ's top 10 holdings account for about 36.38% of its total assets under management.
Performance and Risk
Year-to-date, the Xtrackers Net Zero Pathway Paris Aligned US Equity ETF has added roughly 22.72% so far, and is up about 37.30% over the last 12 months (as of 10/16/2024). USNZ has traded between $26.25 and $37.92 in this past 52-week period.
USNZ has a beta of 1.01 and standard deviation of 16.18% for the trailing three-year period. With about 339 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 $13.53 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $17.09 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.