There is no better time than now to start thinking about the future. For the future to be as bright as possible, it is important to invest in sustainability funds and iShares ESG funds that will pave the way to a healthier planet.
You may want to reduce or even eliminate your exposure to bad business practices or invest in a more green way of commerce.
Whatever the reason, iShares ESG funds are a great way to go about it. Prioritizing ESG standards in your portfolio makes turning over a greener leaf much easier.
As investors turn towards more sustainable options, iShares ESG funds are there to help. There are so many terms, companies, and niches to choose from that it is easy to get lost in the clutter.
We have compiled a list of some of the top sustainability funds and iShares ESG funds on the market today.
Our easy-to-understand best-of list will cover both moderate and high-end options of iShares sustainability ETF, iShares ESG funds, and other green options so that you can confidently invest in your future.
Is iShares Socially Responsible Investing?
Sustainable investing is and will always be a responsible way of investing. ESG funds and green options are about understanding how companies are in the right position to meet some of the world’s most important challenges.
When you invest with iShares, you support eco-friendly, ethical, and eco-friendly progress. Instead of simply focusing on building wealth, you can build wealth while focusing on helping the planet.
This can be done by investing in companies that can create and implement more effective business methods.
With a small investment, big changes can encourage even more industries, communities, and governments to pay attention to the world that needs to be created.
Pairing green ESG investments with traditional ones will help inspire a wide assortment of investors. Not only can they reach their income goals, but they can also do it sustainably. Of course, any investment carries with it a certain amount of risk.
However, given the growth sustainable investment has seen in recent years, that risk is much smaller than that of traditional investment forms.
There are no signs that the field is slowing down, and with more people turning their portfolios towards responsible investing, growth is expected for at least the next several years.
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Supporting iShares International Sustainability
iShares ESG funds are part of a group of funds in the BlackRock family of companies. These exchange-traded funds (ETFs) are intended to help those interested in sustainable, ethical, and green investments meet their goals.
Building a sustainable international portfolio has never been easier than with ESG funds. More than ever, investors of all sizes are interested in ESG funds, sustainable ETFs, and other green stocks to help drive portfolio efficiency.
Clean investing is ethical and a good way to make your dollars count. When you support companies that put environmental, social, and governance into practice, you support international efforts for sustainability.
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How to buy iShares ETFs
iShares offers a variety of exchange-traded funds (ETFs) that can be bought and sold through an internet brokerage. iShares ETFs expose investors to various asset classes, including stocks, bonds, and commodities. iShares ETFs and mutual funds are also traded free of charge through Fidelity or Robinhood.
When considering an iShares Fund, please carefully review the investment objectives and risks before investing. More information about iShares funds can be found in the fund’s prospectus or on the iShares website.
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Our Selection Criteria For The iShares Funds to Invest in Today
We understand that it is important to choose items for your portfolio that meet your needs and match your values.
Our selection of iShares ESG and sustainable funds all share a few of the same broad benchmarks. We look for certain ESG insights in addition to degrees of sustainability before adding them to our list.
Each fund on our list must be transparent about what sustainability means and what the minimum ESG score and investment thresholds are.
This allows us to choose the best sustainability funds and gives you the tools you need to make a personal ethical assessment before investing.
We reviewed close to 30 of the top green ETFs that were ESG-qualified. Investors with larger portfolios may be interested in green investments while sacrificing returns, but all of the ones that made our list feature at least three years of positive gains.
Our criteria also consider associated costs, and we only selected those with lower costs paired with higher long-term performance.
Though some stocks have shown big gains in recent years, they were selected based on their ability to have moderate to great performance long-term, specifically in the 10-year ESG fund market.
See Related: ViacomCBS Inc. ESG Profile (VIAC): Is It Sustainable?
Best iShares ESG Funds from BlackRock
BlackRock has just released details on their new funds, which will excite investors. The iShares Include five large market fossil-free vehicles and two others tailored specifically towards renewable energy development projects or companies, all with advanced ESG screens.
iShares ESG Aware MSCI USA ETF (ESGU)
iShares ESG Aware MSCI USA ETF (ESGU) seeks to track the investment results of an index composed exclusively of US companies with positive environmental, social, and governance characteristics as identified through a rigorous process defined by their provider.
The fund generally invests at least 90% of its assets in the component securities of the underlying index.
The underlying index tilts towards those securities with favorable ESG ratings. iShares ESG Aware MSCI USA ETF (ESGU) has an expense ratio of 0.15%. Given the US stock market dynamics and the low expense ratio, this is one of the best ESG funds.
See Related: Best ESG Target Date Funds
iShares MSCI EM IMI ESG Screened ETF (ESGE)
The iShares MSCI EAFE IMI ESG Screened ETF seeks to track the investment results of an index composed of large- and mid-capitalization companies in Europe, Australasia, and the Far East with positive environmental, social, and governance policies.
The fund generally invests at least 90% of its assets in the component securities of the underlying index.
The underlying index tilts towards those securities with favorable ESG ratings. iShares MSCI EAFE IMI ESG Screened ETF (ESGD) has an expense ratio of 0.15%.
See Related: Best Charles Schwab ESG Funds
iShares MSCI Global Impact ETF
As one of the top-performing iShares ESG funds, the iShares MSCI Global Impact ETF helps make the world a better place.
This portfolio comprises companies worldwide that are committed to achieving and supporting the United Nations’ Sustainable Development Goals.
This includes combating hunger, reducing poverty, working towards clean energy, and even universal education. Most importantly, this fund supports efforts to reduce and reverse global warming. The fund invests in companies that derive at least half of their profits from services, goods, and products that support the UN’s goals.
The stocks of these companies are then given a weight based on the revenue percentage of those ESG-approved activities.
The fund includes between 120 and 140 companies at any given time. The majority of the companies are based in use, with Japan just behind it.
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iShares ESG MSCI EAFE ETF
Investing in local ESG companies is a great way to support your community, but you must go global to make a change. International diversification is a great way to support global change while getting great returns.
If you are worried about emerging markets, then investing in ESGD iShares is a great option. Most of the companies in this fund are large-cap, which also features a few mid-cap options. It invests in global companies but sticks to developed nations such as the Far East, Australasia, and Europe.
This find contains just over 450 stocks, which gives you a great option for diversifying your investments with less risk than jumping headfirst into an emerging market. Although it does not feature a perfect balance, companies from all 11 sectors are represented.
For sure, and all companies take up less than 2% of the portfolio regardless of origin, making is a great way to get a little bit of everything all in one place.
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iShares Global Clean Energy ETF
Our list would not be complete without at least one fund dedicated to clean energy. This fund has holdings in various companies, most of which are in the Americas.
It is worth noting that although this fund performs well and is forecast to move upward in the future, clean energy is still highly dependent on government contracts and subsidies in just about every country.
Political changes and even seasonal weather can affect the performance of the companies in this fund at any given time.
See Related: Best Climate Change Mutual Funds
Other Funds for ESG Investing
The Vanguard FTSE Social Index Fund Admiral (VFTAX)
If you are in the market for a socially responsible ESG-approved fund that is also affordable, VFTAX is your choice. It has surged in popularity recently, increasing its price and fueling its base performance.
Despite the surge, it is actually a healthy fund to invest in.
It has gained almost 4 billion dollars in assets in the last two years, making it a hot investment for new investors and seasoned portfolios. It is a great way to diversify your green portfolio without worrying about investing in controversial industries.
It also features low fees, which makes it an attractive choice for a variety of investors. It operates a passive strategy when screening for ESG criteria while excluding fossil fuels from the list of allowable revenue sources.
It also excludes companies that feature controversies regarding human rights, corruption, and environmental issues with prejudice.
Although this reduces about a third of the available companies, those left are highly diversified and offer strong performance forecasts to maintain their trends over the next decade.
See Related: Johnson & Johnson ESG Profile (JNJ): Is It Sustainable?
Parnassus Core Equity Fund Investor
Parnassus Investments has been a top ESG investment fund for over a decade. If you are looking for a sustainable equity portfolio,
It firmly believes in giving companies with a strong social, environmental, and ethical base more power to make real changes across the globe. It works with companies committed to reducing adverse environmental and social outcomes.
They only invest in companies with a long-term focus on sustainability, efficient management teams, and investment practices with wide moats.
They have had a 20% return increase over the last several years, making them a moderate buy for those looking to diversify their portfolios with ESG fund options.
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AllianceBernstein Sustainable Global Thematic Fund (ATEYX)
This fund combines US-based and international companies dedicated to reaching the United Nations Sustainable Development Goals.
Along with being ESG compliant, these goals focus on empowerment, climate change, and health.
There are usually between 30 and 60 stocks in this fund at any given time, sourced from emerging markets and developed economies. They also cover a range of industries, which further enables diversification.
There is a general balance between large-cap firms and old and new companies. There is no minimum investment, making this a solid ESG fund for new and seasoned veterans with larger portfolios.
See Related: Northrop Grumman Corporation ESG Profile (NOC): Is It Sustainable?
1919 Socially Responsive Balanced Fund (SSIAX)
When looking for shares, the MSCI USA ESG Select ETF and the 1919 Socially Responsive Balanced Fund come to mind.
The fund’s assets are fixed-income and equities, all of which fall under ESG investing guidelines. They look at companies actively contributing to the well-being of those in the community and its workers.
It also checks for ethical employment practices and general adherence to human rights guidelines. Any companies involved in manufacturing, procuring, or distributing nuclear weapons are excluded from their funds.
Also, they limit the inclusion of companies to those with 5% or less of their profits derived from the sale or production of tobacco products. This fund’s expense ratio is slightly higher than others on this list, but the performance and social responsibility make up for the cost.
See Related: How to Measure Social Impact (Step-By-Step Guide)
Parnassus Core Equity Investor (PRBLX)
Parnassus Core Equity Investor is worth considering if you are looking for an ESG-friendly, actively managed fund. It has performed well over the past ten years despite having a relatively high expense ratio.
The fund looks closely at several factors related to ESG when building its portfolio.
It limits the addition of companies that derive a large part of their revenues from tobacco, weapons, alcohol, gambling, or nuclear power. This includes the manufacture, investment, distribution, or direct involvement.
They also prohibit investment in any company involved with the refining, production, exploration, or extraction of fossil fuels. If you are looking for a truly green ESG fund that doesn’t cut corners, Parnassus Core Equity Investor is a great bet.
Note: This post does not constitute investment advice and is purely informative based on our research and experience.
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