Yahoo Finance Is Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ) a Strong ETF Right Now?
A smart beta exchange traded fund, the Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ) debuted on 06/28/2022, and offers broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by Deutsche Bank Ag, USNZ has amassed assets over $204.01 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. USNZ, before fees and expenses, 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
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.
Annual operating expenses for this ETF are 0.10%, making 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
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Apple Inc (AAPL) accounts for about 7.57% of the fund's total assets, followed by Nvidia Corp (NVDA.O) and Microsoft Corp (MSFT).
Its top 10 holdings account for approximately 32.36% of USNZ's total assets under management.
Performance and Risk
Year-to-date, the Xtrackers Net Zero Pathway Paris Aligned US Equity ETF has added about 15.28% so far, and is up about 26.73% over the last 12 months (as of 06/14/2024). USNZ has traded between $26.25 and $35.48 in this past 52-week period.
USNZ has a beta of 1 and standard deviation of 16.52% for the trailing three-year period. With about 359 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) tracks MSCI USA ESG Focus Index and the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) tracks ----------------------------------------. IShares ESG Aware MSCI USA ETF has $12.77 billion in assets, JPMorgan Nasdaq Equity Premium Income ETF has $14.29 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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Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ): ETF Research Reports
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
iShares ESG Aware MSCI USA ETF (ESGU): ETF Research Reports
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ): ETF Research Reports
