The Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ) was launched on 06/28/2022, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Blend category of the market.
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.
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
USNZ is managed by Deutsche Bank Ag, and this fund has amassed over $235.48 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
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 USNZ are 0.10%, which makes it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.45%.
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, Microsoft Corp (MSFT) accounts for about 8.87% of the fund's total assets, followed by Apple Inc (AAPL) and Nvidia Corp (NVDA.O).
USNZ's top 10 holdings account for about 36.61% of its total assets under management.
Performance and Risk
The ETF has added roughly 1.02% so far this year and was up about 6.33% in the last one year (as of 06/23/2025). In the past 52-week period, it has traded between $31.29 and $38.80
The fund has a beta of 1.00 and standard deviation of 17.43% for the trailing three-year period. With about 336 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.
Vanguard ESG U.S. Stock ETF (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 has $10.18 billion in assets, iShares ESG Aware MSCI USA ETF has $13.33 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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Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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