Schwab Emerging Markets ETF vs State Street Climate Fund: Do Emerging Markets or Climate Stocks Offer Better Growth in 2026?
2026-08-05 19:31
•Brendan Coffey •The Motley Fool
••• •••••• Axe Cap view
Emerging Markets ETFs: Authentic Exposure Beats Climate Buzz in 2026
For South African investors, the Schwab Emerging Markets ETF's genuine emerging markets focus and dividend yield make it a better 2026 play than broad climate-themed funds.
Climate-themed ETFs like State Street's NZAC promise to capture the future's green economy, but often lean heavily on US tech giants, turning into disguised growth funds rather than true climate plays. For South African investors watching rand-hedged exposure, the Schwab Emerging Markets ETF (SCHE) offers something more tangible: authentic emerging markets exposure, a respectable 2.6% dividend yield, and a low expense ratio at 0.06%. Its recent 20% annual gain shows emerging markets aren’t dead, especially when China finally stabilizes and commodity prices firm. SCHE’s large allocation to Taiwan Semiconductor (TSM) is also a nod to growth sectors essential for SA’s tech linkage. That said, if global tech's resurgence sparks a broader rally, NZAC’s tech-heavy skew might outperform. But for 2026, investors favouring substance over labels should prefer SCHE’s clarity on emerging markets. this is just our opinion and not financial advice
Buy Schwab Emerging Markets ETF (SCHE) for direct emerging markets exposure with income potential. Avoid NZAC for now, as its climate mandate obscures tech growth risks that may disappoint locally.
- SCHE
- NZAC
- USD/ZAR
- Emerging markets geopolitical shocks
- Global tech sector volatility affecting climate ETF returns
6/10
The article compares two ETFs: Schwab Emerging Markets Equity ETF (SCHE) and State Street SPDR MSCI ACWI Climate Paris Aligned ETF (NZAC). SCHE offers lower fees (0.06%), higher dividend yield (2.6%), and better recent 1-year performance (20.1%), while NZAC provides broader global ESG-screened exposure with stronger long-term returns. The author recommends SCHE for 2026 as it better delivers on its emerging markets promise, whereas NZAC functions as a closet tech/growth fund despite its climate focus.
Our take is based on reporting first published by The Motley Fool.