By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
The panel consensus is that the comparison between IEMG and NZAC is flawed due to their different portfolio roles and exposures. While IEMG offers broader, more liquid core EM exposure, NZAC's climate-screened portfolio has risks of its own, such as concentration in tech megacaps and potential policy shifts against ESG. The key risk is NZAC's tiny AUM and higher expense ratio, which could lead to tracking and liquidity risk in stress scenarios.
Risk: NZAC's tiny AUM and higher expense ratio leading to tracking and liquidity risk in stress scenarios
Opportunity: IEMG's broader, more liquid core EM exposure
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
The State Street SPDR MSCI ACWI Climate Paris Aligned ETF (NASDAQ:NZAC) offers broad global exposure with climate-risk screens, while the iShares Core MSCI Emerging Markets ETF (NYSEMKT:IEMG) focuses strictly on diverse developing economies.
Investors often choose between broad geographic targets or specific thematic overlays. While IEMG provides low-cost access to thousands of companies across emerging markets, NZAC follows a net-zero strategy across both developed and emerging nations, aiming to mitigate climate-related financial risks for long-term portfolios.
| Metric | IEMG | NZAC | |---|---|---| | Issuer | iShares | SPDR | | Share price | $79.34 (as of 2026-08-06) | $46.99 (as of 2026-08-06) | | Expense ratio | 0.09% | 0.12% | | 1-yr return (as of 2026-08-06) | 33.4% | 19.8% | | Dividend yield | 2.3% | 2.0% | | Beta | 0.73 | 0.95 | | AUM | $155.9 billion | $0.2 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The iShares fund is slightly more affordable with an expense ratio of 0.09% compared to 0.12% for the State Street fund. Additionally, the iShares fund offers a higher trailing-12-month dividend yield than the State Street fund.
| Metric | IEMG | NZAC | |---|---|---| | Max drawdown (5 yr) | (33.6%) | (28.3%) | | Growth of $1,000 over 5 years (total return) | $1,444 | $1,591 |
State Street SPDR MSCI ACWI Climate Paris Aligned ETF focuses on Technology at 35%, Financial Services at 17%, and Healthcare at 9%. Its largest positions include Nvidia (NASDAQ:NVDA) at 9.08%, Apple (NASDAQ:AAPL) at 7.24%, and Microsoft (NASDAQ:MSFT) at 5.56%. The fund maintains 629 holdings and was launched in 2014. State Street SPDR MSCI ACWI Climate Paris Aligned ETF has paid $0.94 per share over the trailing 12 months, which on its recent ~$47 share price works out to a 2.0% yield. It incorporates an ESG screen to align with Paris Agreement goals.
iShares Core MSCI Emerging Markets ETF concentrates on Technology at 39%, Financial Services at 19%, and Consumer Cyclical at 9%. Its top holdings include Taiwan Semiconductor Manufacturing (TWSE:2330) at 13.30%, Samsung Electronics (KOSE:A005930) at 5.86%, and SK Hynix (KOSE:A000660) at 4.69%. The fund holds 2,862 positions and was launched in 2012. iShares Core MSCI Emerging Markets ETF has paid $1.80 per share over the trailing 12 months, which on its recent ~$79 share price works out to a 2.3% yield. It tracks a broad index of large, mid, and small-cap stocks from developing economies.
Four leading AI models discuss this article
"The article's direct performance and cost comparison is misleading because NZAC is a global climate-tilted ACWI fund while IEMG is pure emerging markets, making the two unsuitable head-to-head benchmarks."
The article presents IEMG as the clear winner on returns (33.4% vs 19.8%), AUM scale ($156B vs $0.2B), lower fees, and higher yield. Yet NZAC's 5-year $1,000 growth edge ($1,591 vs $1,444) and lower max drawdown suggest the climate-tilted global portfolio has delivered better risk-adjusted results despite heavy developed-market tech exposure (NVDA 9%, AAPL 7%). The piece glosses over that NZAC is an ACWI-based fund, not pure EM, so the performance comparison mixes apples and oranges. IEMG's beta of 0.73 looks attractive until you realize its concentration in Taiwan/ Korea semiconductors creates hidden China and geopolitical risk the article barely mentions.
If climate regulation and carbon pricing accelerate faster than expected, NZAC's Paris-aligned screens could outperform IEMG's heavy EM cyclicals and fossil-adjacent holdings over the next decade, especially with its lower drawdown history.
"NZAC is not an international diversification tool but a concentrated US tech-growth fund disguised by ESG screening."
The comparison between IEMG and NZAC is fundamentally flawed because they serve non-overlapping portfolio functions. IEMG is a classic beta play on EM growth, heavily concentrated in Asian semiconductors, which carries significant geopolitical risk but provides pure exposure to the 'middle-income trap' escape. Conversely, NZAC is essentially a high-conviction tech-heavy fund masked as a climate vehicle; with NVDA, AAPL, and MSFT comprising over 20% of the portfolio, it tracks the S&P 500's performance more closely than any 'international' index. Investors choosing NZAC for 'climate' are actually buying a concentrated US-tech momentum trade with a thin layer of ESG-compliant greenwashing.
One could argue that NZAC’s climate-risk screening acts as a sophisticated quality factor, effectively filtering out stranded-asset risks in the energy sector that could drag down traditional broad-market indices over a 10-year horizon.
"NZAC is being marketed as a competitor to IEMG when it's actually a niche climate-screened global fund with dangerous liquidity constraints ($0.2B AUM) that makes the comparison misleading and the product potentially illiquid for retail investors."
This comparison is fundamentally flawed because it's not actually comparing like-for-like products. NZAC is a developed+emerging blend (ACWI = All Country World Index) with climate screens, while IEMG is pure emerging markets. The article frames this as a choice, but they serve different portfolio roles. More troubling: NZAC's $0.2B AUM versus IEMG's $155.9B signals severe liquidity and survivorship risk for NZAC. The 1-yr return gap (33.4% vs 19.8%) largely reflects IEMG's semiconductor concentration (23.85% in semis) outperforming in 2025-26, not fund quality. NZAC's lower drawdown (28.3% vs 33.6%) is noise given the tiny sample size and different underlying exposures.
NZAC's 5-year total return ($1,591 per $1K) actually beats IEMG ($1,444), and if climate risk truly becomes a material pricing factor—particularly in emerging markets with weaker environmental regulation—NZAC's Paris-aligned screen could be genuine alpha, not just ESG theater.
"NZAC's climate overlay creates diversification and liquidity drag, making it a higher-risk, potentially underperforming core exposure versus IEMG in most risk-on cycles."
NZAC markets itself as a climate-risk hedge with Paris-aligned screens across developed and emerging markets. The strongest contrary view is that its tiny AUM ($0.2B) and higher expense (0.12%) create meaningful tracking and liquidity risk versus IEMG, especially in stress. The article glosses over that NZAC’s climate tilt can concentrate risk in megacaps and tech, while missing the potential for policy shifts to reprice climate bets. A climate mandate can impede nimbleness when energy or material cycles diverge from the ESG narrative. IEMG remains a broader, more liquid core EM exposure, despite higher volatility.
NZAC could outperform in a climate-policy buoyant regime where carbon-transition bets rally, providing some downside protection during policy-driven risk aversion. If policy risk remains elevated, its climate overlay might serve as a ballast rather than a drag.
"Geopolitical Taiwan risk in IEMG outweighs NZAC's liquidity/survivorship concerns in a multi-year horizon."
Claude correctly flags the ACWI vs pure-EM mismatch, but underplays NZAC's 5yr outperformance despite that handicap. The real unmentioned risk is IEMG's 24% semiconductor weighting creating acute Taiwan Strait exposure; any escalation there would crater IEMG far more than NZAC's diversified climate-screened book. Liquidity gap matters until geopolitics becomes the dominant drawdown driver.
"NZAC’s climate-screening creates a pro-cyclical tech concentration that functions more like a high-beta growth play than a defensive geopolitical hedge."
Grok, your focus on Taiwan Strait risk is valid, but you are ignoring the 'green' beta trap. NZAC’s climate-screened portfolio isn't just a hedge; it’s a high-beta bet on the energy transition. If carbon pricing fails to materialize or policy shifts against ESG, NZAC’s tech concentration will amplify losses, not mitigate them. You are treating climate-alignment as a defensive ballast, when in reality, it is currently a pro-cyclical bet on high-valuation, low-carbon tech leaders.
"NZAC's climate tilt is a timing bet on policy acceleration, not a structural hedge—and the market is currently pricing the opposite cycle."
Gemini nails the pro-cyclical trap, but both miss the timing mismatch. NZAC's tech concentration works as a climate hedge only if energy-transition capex accelerates faster than semiconductor cycles cool. Right now, IEMG's semi weighting is outperforming precisely because AI demand is outpacing decarbonization urgency. The real question: does policy risk repricing happen before earnings revisions hit? That determines which fund gets crushed first.
"NZAC's tiny AUM creates liquidity risk that could cause tracking error and larger downside in stress, potentially outweighing climate-tilt gains in uncertain markets."
Grok, your Taiwan Strait risk is valid, but you miss NZAC's Achilles' heel: liquidity/concentration risk from tiny AUM. In a stress or redemptions burst, NZAC could experience wide spreads and tracking error, amplifying losses even if the climate tilt helps on longer horizons. That liquidity risk is the missing piece in the side-by-side, and could flip relative performance during a real stress event, not just in calm markets.
The panel consensus is that the comparison between IEMG and NZAC is flawed due to their different portfolio roles and exposures. While IEMG offers broader, more liquid core EM exposure, NZAC's climate-screened portfolio has risks of its own, such as concentration in tech megacaps and potential policy shifts against ESG. The key risk is NZAC's tiny AUM and higher expense ratio, which could lead to tracking and liquidity risk in stress scenarios.
IEMG's broader, more liquid core EM exposure
NZAC's tiny AUM and higher expense ratio leading to tracking and liquidity risk in stress scenarios