Is iShares Paris-Aligned Climate Optimized MSCI USA ETF (PABU) a Strong ETF Right Now?

Making its debut on 04/08/2022, smart beta exchange traded fund iShares Paris-Aligned Climate Optimized MSCI USA ETF (PABU) provides investors broad exposure to the Style Box - All Cap Blend category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the 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.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is managed by Blackrock. PABU has been able to amass assets over $2.14 billion, making it one of the larger ETFs in the Style Box - All Cap Blend. This particular fund seeks to match the performance of the MSCI USA CLMT PARIS ALGN BNC EXT SLCT ID before fees and expenses.

The MSCI USA Climate Paris Aligned Benchmark Extended Select Index composed of U.S. large & mid-capitalization stocks designed to be compatible with the objectives of the Paris Agreement by following a decarbonization trajectory, reducing exposure to climate-related transition & physical risks & increasing exposure to companies favourably positioned for the transition to a low-carbon economy.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.10% for this ETF, which makes it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.07%.

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.

PABU's heaviest allocation is in the Information Technology sector, which is about 42.3% of the portfolio. Its Financials and Real Estate round out the top three.

Looking at individual holdings, Nvidia Corp (NVDA) accounts for about 9.78% of total assets, followed by Apple Inc (AAPL) and Microsoft Corp (MSFT).

PABU's top 10 holdings account for about 45.92% of its total assets under management.

Performance and Risk

So far this year, PABU has lost about -11.72%, and is up about 8.83% in the last one year (as of 03/31/2026). During this past 52-week period, the fund has traded between $53.19 and $74.50.

The fund has a beta of 1.05 and standard deviation of 15.78% for the trailing three-year period. With about 135 holdings, it effectively diversifies company-specific risk .

Alternatives

iShares Paris-Aligned Climate Optimized MSCI USA ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

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 $10.64 billion in assets, iShares ESG Aware MSCI USA ETF has $14.4 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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iShares Paris-Aligned Climate Optimized MSCI USA ETF (PABU): ETF Research Reports

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

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