Is Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ) a Strong ETF Right Now?

A smart beta exchange traded fund, the Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ) debuted on 06/28/2022, and offers broad exposure to the Style Box - All Cap Blend category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

USNZ is managed by Deutsche Bank Ag, and this fund has amassed over $295.82 million, which makes it one of the average sized ETFs in the Style Box - All Cap Blend. USNZ, before fees and expenses, 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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

With one of the least expensive products in the space, this ETF has annual operating expenses of 0.10%.

It's 12-month trailing dividend yield comes in at 0.94%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

When you look at individual holdings, Nvidia Corp (NVDA.O) accounts for about 9.67% of the fund's total assets, followed by Apple Inc (AAPL) and Microsoft Corp (MSFT).

The top 10 holdings account for about 44.4% of total assets under management.

Performance and Risk

The ETF has gained about 11.49% so far this year and it's up approximately 17.34% in the last one year (as of 09/11/2026). In the past 52-week period, it has traded between $38.98 and $49.26

The ETF has a beta of 1.03 and standard deviation of 15.19% for the trailing three-year period. With about 300 holdings, it effectively diversifies company-specific risk .

Alternatives

Xtrackers Net Zero Pathway Paris Aligned US Equity ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.

Vanguard ESG U.S. Stock ETF Shares (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 Shares has $13.32 billion in assets, iShares ESG Aware MSCI USA ETF has $17.9 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 Reports

This article originally published on Zacks Investment Research (zacks.com).

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