Environmental, Social, and Governance (ESG) criteria prioritize investments in companies with responsible corporate policies, avoiding those involved in risky or unethical practices that harm society. By focusing on these standards, ESG encourages businesses to adopt sustainable and ethical operations, driving accountability and fostering long-term positive change.
In this context, socially conscious investors can consider fundamentally stable ESG-focused ETFs, iShares ESG Aware MSCI USA ETF (ESGU), iShares MSCI KLD 400 Social ETF (DSI), and iShares ESG Advanced MSCI USA ETF (USXF), as promising opportunities for sustainable growth.
Investing in ESG-focused companies can help reduce environmental risks, from minimizing pollution to achieving a smaller carbon footprint. These companies demonstrate long-term resilience, making them attractive for investors seeking sustainable growth.
According to Fortune, the ESG investment sector has become a significant force, managing $30 to $40 trillion globally. With strong growth projected, the industry is expected to reach $35 to $50 trillion in assets by 2030, highlighting its expanding influence.
Moreover, according to a report by Precedence Research, the global ESG investing market size is forecasted to reach $167.49 trillion by 2034, growing at an impressive CAGR of 18.8%.
Now, let us dive deep into the fundamentals of three ESG-focuses ETFs, starting with #3.
ETF #3: iShares ESG Aware MSCI USA ETF (ESGU)
Launched by BlackRock, Inc. (BLK) and managed by BlackRock Fund Advisors, ESGU invests in stocks of socially conscious companies that prioritize environmental responsibility. ESGU tracks the MSCI USA Extended ESG Focus Index using representative sampling.
With $14.43 billion in assets under management (AUM), ESGU’s top holdings include Apple Inc. (AAPL) with a 6.71% weighting, followed by NVIDIA Corporation (NVDA) at 6.61% weighting, Microsoft Corporation (MSFT) at 5.89% and Amazon.com, Inc. (AMZN) at 3.91%.
The ETF has a total of 286 holdings, with its top 10 assets comprising 34.4% of its AUM. Plus, ESGU has an expense ratio of 0.15%, lower than the category average of 0.36%. Its net inflows came in at $273.45 million over the past month and $490.01 million over the past three months.
In addition, ESGU pays an annual dividend of $1.45, which translates to a 1.08% yield at the current price level. Moreover, the fund’s dividend payouts have grown at a CAGR of 9.6% over the past five years.
ESGU has gained 13.9% over the past six months and 31.4% over the past year to close the last trading session at $133.29. The fund’s NAV was $133.22 as of December 9, 2024.
ESGU’s POWR Ratings reflect its strong prospects. The fund has an overall rating of A, translating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ESGU has an A grade for Buy & Hold and Trade. It is ranked #19 out of 280 ETFs in the A-rated Large Cap Blend ETFs group.
To access all ESGU’s POWR Ratings, click here.
ETF #2: iShares MSCI KLD 400 Social ETF (DSI)
Launched by BLK and managed by BlackRock Fund Advisors, DSI focuses on public equities, specifically investing in companies with strong social and environmental responsibility. It aims to track the performance of the MSCI KLD 400 Social Index using the representative sampling technique.
With an AUM of $5.01 billion, DSI’s top holdings include NVDA with a 12.34% weighting, followed by MSFT at 11.06%, Tesla, Inc. (TSLA) at 3.95% and Alphabet Inc. (GOOGL) at 3.62%. The ETF has a total of 404 holdings, with its top 10 assets comprising 41.64% of its AUM.
Its expense ratio is 0.25%, lower than the category average of 0.36%. Moreover, DSI pays an annual dividend of $1.12, which translates to a 0.97% yield at the current price level. The fund’s dividend payouts have increased at a CAGR of 9% over the past three years.
DSI has surged 12.3% over the past six months and 30.6% over the past year to close the last trading session at $114.71. The fund has a NAV of $114.65 as of December 9, 2024.
DSI’s POWR Ratings reflect its robust prospects. The fund has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Buy & Hold and Trade. DSI is ranked #32 out of 280 ETFs in the Large Cap Blend ETFs group.
To check all the POWR Ratings for DSI, click here.
ETF #1: iShares ESG Advanced MSCI USA ETF (USXF)
Launched by BLK and managed by BlackRock Fund Advisors, USXF invests in stocks of companies operating across diversified sectors that have robust social and environmental policies. It aims to replicate the performance of the MSCI USA Choice ESG Screened Index using a representative sampling approach.
With $1.34 billion in AUM, USXF’s top holdings are NVDA with a 16.68% weighting, followed by Broadcom Inc. (AVGO) with a 3.80% weighting, Visa Inc. (V) with a 2.48% weighting and Mastercard Incorporated (MA) at 2.08% weighting. USXF has a total of 347 holdings, with its top 10 assets comprising 32.31% of its AUM.
The fund has an expense ratio of 0.10%, lower than the category average of 0.36%. Its net inflows came in at $147.22 million over the past six months and $247.02 million over the past year.
Furthermore, USXF pays an annual dividend of $0.50, which translates to a 0.95% yield at the current price level. Its dividend payouts have grown at a CAGR of 16.5% over the past three years.
The ETF has gained 11.8% over the past three months and 36.4% over the past year to close the last trading session at $51.80. The fund’s NAV was $51.76 as of December 9, 2024.
USXF’s POWR Ratings reflect its strong fundamentals. The fund has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
USXF has an A grade for Buy & Hold and Trade. Within the All Cap Equities ETFs group, it is ranked #15 out of 169 ETFs.
Click here to see all of USXF’s POWR Ratings.
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ESGU shares were unchanged in premarket trading Tuesday. Year-to-date, ESGU has gained 28.23%, versus a 28.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
3 ESG-Focused ETFs for the Socially Conscious Investor StockNews.com
