Schwab Emerging Markets ETF vs State Street Climate Fund: Do Emerging Markets or Climate Stocks Offer Better Growth in 2026?
Written by Brendan Coffey for The Motley Fool -> Schwab Emerging Markets Equity ETF offers a lower expense ratio of 0.06% and a higher dividend yield compared to the State Street fund State Street …
Schwab Emerging Markets Equity ETF offers a lower expense ratio of 0.06% and a higher dividend yield compared to the State Street fund
State Street SPDR MSCI ACWI Climate Paris Aligned ETF provides exposure to 630 global holdings filtered through an ESG screen
Schwab Emerging Markets Equity ETF holds over 2,000 positions and maintains a significantly larger $12.2 billion in assets under management
The State Street SPDR MSCI ACWI Climate Paris Aligned ETF (NASDAQ:NZAC) targets global companies aligned with Paris Agreement climate goals, whereas Schwab Emerging Markets Equity ETF (NYSEMKT:SCHE) provides broad market capitalization exposure to developing nations.
Investors evaluating these funds are choosing between two distinct diversification strategies. While one focuses on the growth potential of emerging economies, the other implements a sustainability overlay across a global universe of large and mid-sized companies to mitigate climate-related financial risks.
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 as of the close of trading on July 30.
The Schwab fund is the more affordable option with a 0.06% expense ratio. It also offers a higher payout, with its 2.6% yield outpacing the 2.1% distribution provided by the climate-aligned State Street fund.
State Street SPDR MSCI ACWI Climate Paris Aligned ETF allocates 37% of its portfolio to technology, 16% to financial services, and 9% to healthcare. The fund uses an ESG screen to select 625 securities that align with net-zero transition goals. Its largest positions include Nvidia Corp (NASDAQ:NVDA) at 5.7%, Apple Inc. (NASDAQ:AAPL) at 4.6%, and Microsoft Corp (NASDAQ:MSFT) at 2.9%. 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 ~$45.54 share price works out to a 2.1% yield.
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