SPDR® MSCI ACWI Climate Paris Aligned ETF (NZAC)

Overview

The SPDRu00ae MSCI ACWI Climate Paris Aligned ETF (NZAC) seeks to track the MSCI ACWI Climate Paris Aligned Index, aiming for significant reductions in carbon emissions intensity and increased exposure to companies aligned with a 1.5u00b0C climate scenario. The fund focuses on global equities while adhering to Paris Agreement objectives.

Reputation and Reliability

State Street Global Advisors (SSGA) is a well-established and reputable ETF provider with a long history in the investment management industry.

Management Expertise

SSGA has extensive experience in managing index-tracking ETFs and has a dedicated team focused on ESG and climate-aligned investing.

Goal

To provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the MSCI ACWI Climate Paris Aligned Index.

Investment Approach and Strategy

Strategy: The ETF employs a passive management strategy, seeking to replicate the performance of the MSCI ACWI Climate Paris Aligned Index.

Composition The ETF holds a diversified portfolio of global equities selected and weighted based on their alignment with the Paris Agreement goals, emphasizing companies with lower carbon emissions and those supporting climate transition.

Market Share: The market share of NZAC is relatively small compared to broader global equity ETFs but is growing within the climate-focused ETF segment.

Total Net Assets (AUM): 105720000

Key Competitors

• iShares MSCI ACWI Low Carbon Target ETF (CRBN)
• Xtrackers MSCI ACWI Low Carbon Equity ETF (ACWX)
• Amundi Index MSCI World SRI UCITS ETF DR (WSRI)

Competitive Landscape

The climate-focused ETF market is becoming increasingly competitive. NZAC benefits from SSGA's established brand, but faces competition from larger ETFs with greater AUM and liquidity. Advantages include its specific focus on the Paris Agreement and relatively low expense ratio (when compared to its fund objective peers). Disadvantages include its smaller AUM and relatively recent inception compared to some competitors.

Historical Performance: Historical performance data is limited due to the ETF's relatively recent inception. Performance will largely mirror the underlying index.

Benchmark Comparison: The ETF's performance should closely track the MSCI ACWI Climate Paris Aligned Index, with slight deviations due to expenses and tracking error.

Expense Ratio: 0.17

Average Trading Volume

The ETF's average trading volume is moderate, suggesting reasonable liquidity for most investors.

Bid-Ask Spread

The bid-ask spread is typically low, indicating relatively efficient trading.

Market Environment Factors

Economic growth, climate change awareness, government policies promoting sustainability, and investor demand for ESG investments are all factors impacting the ETF's performance.

Growth Trajectory

The ETF's growth trajectory is tied to the increasing investor interest in sustainable investing and the transition to a low-carbon economy. Future changes in strategy and holdings will likely reflect adaptations to the MSCI ACWI Climate Paris Aligned Index methodology.

Competitive Edge

NZAC's competitive advantage lies in its precise targeting of the Paris Agreement goals, utilizing the MSCI ACWI Climate Paris Aligned Index, which is designed for deep decarbonization. SSGA's well-established reputation as an ETF provider further supports this. The rigorous methodology of the index, which includes exclusions and weighting adjustments, aims to deliver substantial climate impact. The ETF's low expense ratio, relative to comparable funds with similar objectives, enhances its attractiveness to cost-conscious investors and ensures its performance will be better than other climate-focused ETF competitors.

Volatility

The ETF's volatility is expected to be similar to that of the broader global equity market, with potential for increased volatility during periods of market stress.

Market Risk

Market risk includes fluctuations in global equity prices, economic downturns, and changes in investor sentiment towards climate-focused investments. There is also potential tracking error as the fund tries to track the index, so that is a risk as well.

Ideal Investor Profile

The ideal investor is one seeking exposure to global equities with a strong focus on climate change mitigation and alignment with the Paris Agreement goals, and/or who prioritize investments with stringent environmental, social, and governance (ESG) criteria.

Market Risk

The ETF is suitable for long-term investors seeking to align their portfolios with climate-related objectives, as well as active traders or passive index followers looking to gain targeted exposure to climate-conscious companies.

The SPDRu00ae MSCI ACWI Climate Paris Aligned ETF offers investors a way to align their portfolios with the Paris Agreement goals by investing in companies demonstrating significant reductions in carbon emissions intensity. It tracks the MSCI ACWI Climate Paris Aligned Index and aims for meaningful exposure to companies contributing to a 1.5u00b0C climate scenario, providing a low-cost and efficient option for climate-conscious investors. The ETF's relatively recent inception means it has limited historical performance data, but the fund's performance is designed to mirror the targeted climate-aware equity market. SSGA's strong reputation and extensive ESG expertise provide confidence in the fund's management, positioning NZAC as a viable option for investors seeking exposure to a broad basket of stocks that demonstrate an alignment to the Paris agreement's aims to limit global warming.

Data Sources:

• SSGA Website
• MSCI Index Fact Sheet
• ETF.com
• Seeking Alpha

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Investment decisions should be based on individual circumstances and after consulting with a qualified financial advisor. Market data is subject to change.