SPDR Series Trust State Street SPDR MSCI USA Climate Paris Aligned ETF (NZUS) seeks to track the MSCI USA Climate Paris Aligned Index, which measures U.S. large- and mid-cap stocks selected and weighted to align with Paris Climate Agreement goals while maintaining broad market exposure.
How It Works
NZUS uses a rules-based approach that screens the MSCI USA universe for companies with lower carbon emissions, fossil fuel exposure, and climate transition risks while overweighting firms with green revenue opportunities. The index methodology applies sector constraints to maintain diversification while achieving a 50% carbon intensity reduction versus the parent index. Holdings are market-cap weighted within climate-optimized parameters and rebalanced quarterly.
Key Features
- Climate-aligned methodology reduces portfolio carbon footprint by 50% while maintaining broad U.S. market diversification across sectors
- Launched in 2022 making it among the newer generation of Paris Agreement-aligned equity ETFs with updated methodology
- Attractive 5.07% dividend yield suggests focus on established dividend-paying companies within climate-conscious framework
Risks
- This ETF can lose value if climate-focused investing falls out of favor or if excluded high-carbon sectors significantly outperform
- Limited track record since 2022 inception means performance during various market cycles remains unproven for this specific strategy
- Broad equity exposure means potential 30-40% declines during severe bear markets, similar to general U.S. stock market volatility
Who Should Own This
Best suited for ESG-conscious investors with 5+ year time horizons seeking core U.S. equity exposure (20-40% of equity allocation) aligned with climate goals. Medium-to-high risk tolerance required due to equity volatility. Appeals to investors wanting traditional market returns while supporting Paris Climate Agreement objectives.