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

The iShares Paris-Aligned Climate MSCI USA ETF (PABU) was launched on 04/08/2022, and is a smart beta exchange traded fund designed to offer 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.Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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.Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.Fund Sponsor & IndexBecause the fund has amassed over $2.28 billion, this makes it one of the larger ETFs in the Style Box - All Cap Blend. PABU is managed by Blackrock. Before fees and expenses, PABU seeks to match the performance of the MSCI USA CLMT PARIS ALGN BNC EXT SLCT ID.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 ExpensesInvestors 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.Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.It has a 12-month trailing dividend yield of 1.15%.Sector Exposure and Top HoldingsETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.For PABU, it has heaviest allocation in the Information Technology sector --about 39.9% of the portfolio --while Financials and Healthcare round out the top three.When you look at individual holdings, Nvidia Corp (NVDA) accounts for about 9.64% of the fund's total assets, followed by Microsoft Corp (MSFT) and Apple Inc (AAPL).PABU's top 10 holdings account for about 45.04% of its total assets under management.Performance and RiskThe ETF has added roughly 10.41% and was up about 14.15% so far this year and in the past one year (as of 09/24/2025), respectively. PABU has traded between $53.19 and $72.07 during this last 52-week period. The ETF has a beta of 1.04 and standard deviation of 17.53% for the trailing three-year period. With about 178 holdings, it effectively diversifies company-specific risk .AlternativesiShares Paris-Aligned Climate 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 (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 has $11.52 billion in assets, iShares ESG Aware MSCI USA ETF has $14.84 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 BlendBottom LineTo 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.Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report iShares Paris-Aligned Climate MSCI USA ETF (PABU): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks