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6 ESG ETFs Close to or Above the $1B Asset Mark

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Environmental, social and governance (ESG) investing is the new big thing in the ETF industry. Issuers are increasingly coming up with products. In the whole bunch of newer themes, socially-relevant funds are in vogue. Investors seek companies that focus heavily on ESG practices, if we go by BlackRock (read: Guide to Socially Responsible ETFs).

Sustainable or ESG investing is becoming increasingly mainstream. As much as 85% of U.S. individual investors are now finding sustainable investing strategies interesting, according to a new study from the financial services firm Morgan Stanley.

About 95% of millennials intend to be socially responsible while making investment decisions. About 67% of millennials are “taking part in at least one sustainable investing activity.”

And with millennials seemingly the growth driver of the U.S. economy, outpacing baby boomers in 2015 and comprising over one quarter of the nation’s population, their investing preferences are sure to shape the investing world.

As much as 90% of global institutional investors believe ESG-infused portfolios are likely to perform in line or better than non-ESG portfolios. In the United States, sustainable investing assets touched $12 trillion in 2018 (read: 6 ESG ETFs Beating SPY This Year: Is There More Room to Run?).  

Why is it a Surging Segment?

Investors appear to be bothered about the future of the environment and the effect it might have on their investing portfolio. For instance, since apprehension about the death of natural resources has urged global superpowers to boost clean energy and reduce carbon emissions, investors believe that stocks with higher ESG scores will eventually outperform.

Apart from the social standpoint, this investing practice has a valid reason for being popular. As per the source, lesser focus on environmental issues by companies may result in lawsuits, fines, and damages.

Against this backdrop, we highlight a few ESG ETFs that have amassed close to or more than $1 billion in assets so far. Investors should note that iShares has seen notable success in this field as five among the top six successful ESG ETFs are from BlackRock’s iShares.

ETFs in Focus

iShares ESG MSCI USA Leaders ETF (SUSL - Free Report) — AUM $1.61 billion

The underlying MSCI USA Extended ESG Leaders Index comprises U.S. large and mid-capitalization stocks of companies with high ESG performance relative to their sector peers. It charges 10 bps in fees.

iShares MSCI KLD 400 Social ETF (DSI - Free Report) — AUM $1.55 billion

The underlying MSCI KLD 400 Social Index is a free float-adjusted market capitalization index designed to measure the equity performance of U.S. companies that have positive ESG characteristics. The fund charges 25 bps in fees.

Xtrackers MSCI U.S.A. ESG Leaders Equity ETF (USSG - Free Report) — AUM $1.50 billion

The underlying MSCI USA ESG Leaders Index is a capitalization weighted index that provides exposure to companies with high ESG performance relative to their sector peers. The fund charges 10 bps in fees.

iShares MSCI USA ESG Select ETF (SUSA - Free Report) — AUM $1.18 billion

The underlying MSCI USA Extended ESG Select Index comprises U.S. companies that have positive ESG characteristics. The fund charges 25 bps in fees.

iShares ESG MSCI EAFE ETF (ESGD - Free Report) — AUM $969.5 million

The underlying MSCI EAFE Extended ESG Focus Index comprises large and mid-capitalization developed market equities, excluding the U.S. and Canada that have positive ESG characteristics. The fund charges 20 bps in fees.

iShares ESG MSCI U.S.A. ETF (ESGU - Free Report) — AUM $967.05 million

The underlying MSCI USA Extended ESG Focus Index comprises U.S. companies that have positive ESG characteristics while exhibiting risk and return characteristics similar to those of the parent index. The fund charges 15 bps in fees (read: Should You Buy Vegan Stocks & ETF?)

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