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 be looking to help reduce or even eliminate your exposure to bad business practices, or you may be interested in investing in a more green way of commerce.
Whatever the reason, iShares ESG funds are a great way to go about it. When you make ESG standards a priority in your portfolio, turning over a greener leaf is that 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 put together 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.
Table of Contents
- Is iShares Socially Responsible Investing?
- Supporting iShares International Sustainability
- How to buy iShares ETFs
- Our Selection Criteria For The iShares Funds to Invest in Today
- Best iShares ESG Funds from BlackRock
- iShares ESG Aware MSCI USA ETF (ESGU)
- iShares MSCI EM IMI ESG Screened ETF (ESGE)
- iShares MSCI Global Impact ETF
- iShares ESG MSCI EAFE ETF
- iShares Global Clean Energy ETF
- Other Funds for ESG Investing
- The Vanguard FTSE Social Index Fund Admiral (VFTAX)
- Parnassus Core Equity Fund Investor
- AllianceBernstein Sustainable Global Thematic Fund (ATEYX)
- 1919 Socially Responsive Balanced Fund (SSIAX)
- Parnassus Core Equity Investor (PRBLX)
Sustainable investing is and will always be a responsible way of investing. ESG funds and green options are all 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 are supporting eco-friendly progress that is also ethical.
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 ways of doing business.
With a small investment, big changes are possible that will encourage even more industries, communities, and governments to pay attention to the world that needs to be created.
Pairing green ESG investments with those of the traditional variety will help inspire a wide assortment of investors.
Not only can they reach their income goals, but it can also be done sustainably. Of course, any investment carries with it a certain amount of risk.
However, with the amount of growth sustainable investment has seen in recent years, that risk is much smaller than traditional investment forms.
There are no signs that the field is slowing down, and in fact, with more people turning their portfolios towards responsible investing, growth is to be expected for at least the next several years.
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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 neet 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 investing and also a good way to make your dollars count. When you choose to support companies that put environmental, social, and governance into practice, you support international efforts for sustainability.
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iShares offers a variety of exchange-traded funds (ETFs) that can be bought and sold through an internet brokerage. iShares ETFs offer investors exposure to a wide range of 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 for investment, please review the investment objectives and risks carefully before investing. More information about iShares funds can be found in the fund’s prospectus or on the iShares website.
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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 funds 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 have a specific level of transparency regarding what sustainability means and what the minimum ESG score and thresholds are for investments.
This not only allows us to choose the best sustainability funds out there, but it will also give you the tools you need to make a personal ethical assessment before investing.
We went over close to 30 of the top green ETFs that were ESG qualified. In some cases, 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 tool associated costs into account, and we only selected those that have lower costs paired with higher performance over the long term.
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.
BlackRock has just released details on their new funds that are sure to excite investors. The iShares Include 5 large market fossil-free vehicles and 2 others tailored specifically towards renewable energy development projects or companies, all with advanced ESG screens.
iShares ESG Aware MSCI USA ETF (ESGU) seeks to track the investment results of an index composed exclusively of U.S 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 dynamics of the US stock market and the low expense ratio, this is one of the best ESG funds on the market.
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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 that have 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%.
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In terms of top-performing iShares ESG funds, iShares MSCI Global Impact ETF helps make the world a better place.
This portfolio comprises a collection of companies from around the world that are committed to reaching 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 goals of the UN.
The stocks of these companies are then given a weight based on the revenue percentage of those ESG approved activities.
In all, there are between 120 and 140 companies included in the fund at any given time. The majority of the companies are based in use, with Japan just behind it.
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Investing in local ESG companies is a great way to support your community, but you will need to go global if you really want to make a change. International diversification is a great way to support global change while also 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.
In all, there are just over 450 stocks in this find which give you a great option that diversifies your investments with less risk than jumping headfirst into an emerging market. Although it does not feature a perfect balance, companies from all of the 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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Our list would not be complete without at least one fund that is dedicated to clean energy. This fund has holdings in a variety of companies, with the bulk being in the Americas.
It is worth noting that although this fund does perform well and is forecast to have an upward movement in the future, clean energy is still highly dependent on government contracts and government subsidies in just about every country.
Political changes and even the seasonal weather can affect how well the companies in this fund perform 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 the choice for you. It has surged in popularity in recent years, increasing its price and fueling its base performance.
Despite the surge, it is actually a healthy fund to invest in.
In the last two years, it has gained almost 4 billion dollars in assets making it a hot investment for new investors and seasoned portfolios alike. 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 that is forecast to maintain their trends over the next decade.
Parnassus Core Equity Fund Investor
Parnassus Investments has been a top ESG investment fund for more than 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. They work with companies that are 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% increase in returns 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 is a combination of US-based companies 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 alike. They also cover a range of industries which further enables diversification.
There is a general balance between all sized-cap firms as well as both old and new companies. There is no minimum investment making this a solid ESG fund for new and seasoned veterans with larger portfolios.
1919 Socially Responsive Balanced Fund (SSIAX)
When looking for shares, MSCI USA ESG Select ETF, 1919 Socially Responsive Balanced Fund comes to mind.
The fund’s assets are comprised of both fixed-income assets and equities, all of which fall under ESG investing guidelines.
They look at companies that are 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 the manufacture, procurement, or distribution of nuclear weapons are barred from being included in their funds.
Also, they limit the inclusion of companies to those that have 5% or less of their profits derived from the sale or production of tobacco products. The expense ratio of this fund is a bit higher than others on this list, but the performance and social responsibility make up for the cost.
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Parnassus Core Equity Investor (PRBLX)
If you are looking for an ESG friendly actively managed fund, Parnassus Core Equity Investor is worth considering. It has performed well over the ten years despite having a relatively high expense ratio.
The fund takes a close look 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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Kyle Kroeger, esteemed Purdue University alum and accomplished finance professional, brings a decade of invaluable experience from diverse finance roles in both small and large firms. An astute investor himself, Kyle adeptly navigates the spheres of corporate and client-side finance, always guiding with a principal investor’s sharp acumen.
Hailing from a lineage of industrious Midwestern entrepreneurs and creatives, his business instincts are deeply ingrained. This background fuels his entrepreneurial spirit and underpins his commitment to responsible investment. As the Founder and Owner of The Impact Investor, Kyle fervently advocates for increased awareness of ethically invested funds, empowering individuals to make judicious investment decisions.
Striving to marry financial prudence with positive societal impact, Kyle imparts practical strategies for saving and investing, underlined by a robust ethos of conscientious capitalism. His ambition transcends personal gain, aiming instead to spark transformative global change through the power of responsible investment.
When not immersed in the world of finance, he’s continually captivated by the cultural richness of new cities, relishing the opportunity to learn from diverse societies. This passion for travel is eloquently documented on his site, ViaTravelers.com, where you can delve into his unique experiences via his author profile.