Updated
Updated · The Motley Fool · Jun 21
iShares IEMG Tops NZAC With 42.5% Return as ETFs Split on Climate and Emerging-Markets Exposure
Updated
Updated · The Motley Fool · Jun 21

iShares IEMG Tops NZAC With 42.5% Return as ETFs Split on Climate and Emerging-Markets Exposure

2 articles · Updated · The Motley Fool · Jun 21

Summary

  • IEMG posted a 42.5% one-year return versus 20.5% for NZAC, while charging 0.09% annually against 0.12% for the climate-focused State Street fund.
  • That cost and performance edge comes with a narrower mandate: IEMG holds 2,658 emerging-market stocks, while NZAC owns 630 global companies screened to align with Paris climate goals.
  • Over five years, NZAC turned $1,000 into $1,567 versus $1,412 for IEMG and suffered a smaller 28.3% max drawdown, suggesting steadier long-term results despite its weaker recent return.
  • Geographic and portfolio concentration drive the trade-off: NZAC is 64% weighted to U.S. stocks, while IEMG has 18% in China and larger positions in Taiwan Semiconductor, Samsung Electronics and SK Hynix.
  • The comparison leaves the funds serving different roles—NZAC for investors prioritizing climate-aligned global exposure, IEMG for those seeking liquid, low-cost access to higher-growth emerging markets.

Insights

Climate-aligned indexes can underperform. Are investors sacrificing returns for sustainability in key growth markets?
Emerging markets show strong fundamentals but historic risk. How can investors balance this high-stakes growth opportunity?
With the US exiting the Paris Agreement, how will a US-heavy climate fund navigate its strategy and potential risks?