SPGM vs. NZAC: Is ESG Investing Worth It?

Core Insights - The State Street SPDR Portfolio MSCI Global Stock Market ETF (SPGM) and the State Street SPDR MSCI ACWI Climate Paris Aligned ETF (NZAC) represent two distinct approaches to global equity investing, with SPGM focusing on a broad market and NZAC emphasizing climate alignment [1] Cost & Size Comparison - SPGM has a lower expense ratio of 0.09% compared to NZAC's 0.12% - As of February 4, 2026, SPGM's one-year return is 23.5%, while NZAC's is 17.6% - SPGM has a total asset under management (AUM) of $1.5 billion, significantly larger than NZAC's $182 million [2][3] Performance & Risk Analysis - Over five years, SPGM experienced a maximum drawdown of -23.7%, while NZAC had a lower drawdown of -18.01% - An investment of $1,000 would have grown to $1,553 in SPGM and $1,452 in NZAC over the same period [4] Portfolio Composition - NZAC tracks an index aligned with the Paris Agreement, focusing on large- and mid-cap stocks with a total of 688 holdings, with a sector mix of 32.42% in information technology, 17.3% in financials, and 11% in industrials [5] - SPGM holds over 2,900 stocks, with a sector allocation of 24.5% in technology, 17% in financial services, and 13% in industrials, closely mirroring the global equity market [6] Investment Implications - The primary differentiator between SPGM and NZAC is NZAC's focus on environmental, social, and governance (ESG) investing, appealing to investors prioritizing sustainability [7] - While ESG investing is popular, it faces criticism regarding issues like greenwashing and higher management costs, as reflected in NZAC's higher expense ratio [8]