Best ESG ETFs For November 2024

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Environmental, social and governance ETFs let investors put their money in socially responsible companies without having to do any of the legwork of identifying and vetting their stocks. Like all exchange-traded funds, ESG funds bring sweet tax advantages over mutual funds, they cost a whole lot less and they spread all your eggs out into lots of different baskets with the purchase of a single share. 

They cost more than the cheapest mainstream index funds, but they don’t have to cost a lot. Depending on the fund’s criteria, ESG-themed ETFs can include anything from small-cap stocks in emerging markets to funds with top holdings dominated by companies like Microsoft and Amazon.

Using a variety of sources, GOBankingRates identified some of the best ESG funds on the market. You’ll notice that many of them are new, and that’s because this hot ETF category is still emerging. Read on to meet the ETFs that can grow your money without dinging your conscience.

Vanguard ESG U.S. Stock ETF (ESGV)

Vanguard’s ESG ETF gets to bat leadoff for its impressively low fees alone, which is par for the course for Vanguard. With an expense ratio of 0.09%, ESGV isn’t dirt cheap, but considering the average fee for similar funds is 0.78%, ESGV is the difference between $90 and $780 in fees you’ll pay on $10,000 invested over 10 years. It has done well by its investors, too. As of Nov. 1, it had gained 19.58% year to date and over 13.51% since its inception in September 2018.

• Average annual return since inception: 13.51%
• Expense ratio: 0.09%
• Top 5 holdings: Microsoft, Apple, Nvidia, Amazon.com, Meta
• Fund exclusion areas: Adult entertainment, alcohol, tobacco, cannabis, gambling, military weapons, consumer firearms, nuclear power, oil exploration/drilling

iShares ESG Aware MSCI EM ETF (ESGE)

Blackrock’s iShares brand is up there with Vanguard among the biggest names in the ETF world, and ESGE’s $4.47 billion in assets under management is the proof. With a respectable expense ratio of 0.25%, it’s a great way to get broad exposure to international large- and mid-cap stocks from emerging markets. As of Nov. 1, the fund was dominated by financial and information technology companies from China, Taiwan, India and South Korea.

• Average annual return since inception: 6.76%
• Expense ratio: 0.25%
• Top 5 holdings: Taiwan Semiconductor Manufacturing, Tencent Holdings, Samsung Electronics, Alibaba Group Holding, China Construction Bank Corp
• Fund exclusion areas: Tobacco, controversial weapons, civilian firearms, thermal coal and oil sands

American Century Sustainable Equity ETF (ESGA)

This fund is not going to be for everyone. It’s an actively managed fund, which means it benefits from the guiding hands of real, professional fund managers. Despite being actively managed, however, its expense ratio is a tolerable 0.39%. But it’s unlike virtually any other ESG ETFs out there — or most ETFs in general, actually.

Most ETFs reveal their holdings to the public every day. ESGA does not. That kind of secrecy comes with risks, but it provides protection against other traders copying the fund’s strategy and lowering its value. Note that as of Dec. 10, this fund will be renamed Large Cap Equity ETF, and it will trade under a new ticker — ACLC.

• Average annual return since inception: 15.73%
• Expense ratio: 0.39% 
• Top 5 holdings: Microsoft, Apple, Nvidia, Alphabet, Amazon.com
• Fund exclusion areas: None disclosed

Nuveen ESG Mid-Cap Growth ETF (NUMG)

Unlike ESGA, NUMG is a passively managed index fund, but its expense ratio is a comparable 0.31%. Also unlike ESGA, it earns its bread and butter in mid-cap growth stocks. NUMG tracks the Nuveen ESG USA Mid-Cap Growth Index. With 47 stocks that place a heavy focus on information technology (35.76% of the portfolio) and industrials (22.71% of the portfolio), the ETF has delivered impressive average annual gains of 10.86% since its inception in December 2016.

• Average annual return since inception: 10.86%
• Expense ratio: 0.31%
• Top 5 holdings: The Trade Desk Inc., Fair Isaac Corp., Grainger W.W., Gartner Group, Vulcan Materials Co.
• Fund exclusion areas: Not specified

Nuveen ESG Small-Cap ETF (NUSC)

Also from Nuveen is NUSC, which stands out as one of the few ESG-focused ETFs that concentrate on small-cap stocks. It tracks the Nuveen ESG USA Small-Cap Index and includes only U.S. companies that meet the fund’s ESG standards. That includes filters on companies based on controversial business involvement and carbon. It has an expense ratio of 0.31% and has returned 9.32% annually since its inception at the tail end of 2016.

• Average annual return since inception: 9.32%
• Expense ratio: 0.31%
• Top 5 holdings: Service Corp. International, Murphy USA Inc., H&R Block Inc., Nutanix Inc., East West Bancorp Inc.
• Fund exclusion areas: Not specified

SPDR SSGA Gender Diversity Index ETF (SHE)

This fund made its debut in dramatic fashion when State Street — known for its wildly popular SPDR brand of funds — unveiled the now-famous “Fearless Girl” statue on Wall Street. Fittingly, the fund focuses on companies that have women pulling the corporate strings. That includes CEOs and other senior executives, board seats and top management. Its expense ratio is a low 0.20% and as of Nov. 1, it was surpassing 10% annual returns since its inception in 2016.

• Average annual return since inception: 11.28%
• Expense ratio: 0.20%
• Top 5 holdings: Meta, Microsoft, Accenture PLC, Apple, Nvidia
• Fund exclusion areas: N/A

Global X Conscious Companies ETF (KRMA)

One of the coolest and most innovative brands in the ETF world, Global X has fund offerings in segments like robotics and artificial intelligence, cannabis, fintech, cybersecurity, video games and esports and the Internet of Things. It makes sense, then, that Global X would create one of the hottest ESG ETFs on the market. With a manageable expense ratio of 0.43%, by Nov. 1 it had turned in cumulative gains of more than 180% since its inception in 2016, making it one of the best-performing ESG funds you can buy.

• Average annual return since inception: 13.68%
• Expense ratio: 0.43%
• Top 5 holdings: Apple, Microsoft, Nvidia, Alphabet, Amazon.com
• Fund exclusion areas: N/A

Vanguard FTSE Social Index Fund Admiral (VFTAX)

The second Vanguard fund on the list is the FTSE Social Index Fund Admiral — its 0.14% expense ratio is nearly as tiny as that of ESGV. It tracks mid- and large-cap stocks on the FTSE US Choice Index and it filters out companies that don’t meet labor, human rights, environmental and anti-corruption standards. The fund is heavily weighted toward tech stocks, which make up over 41% of the portfolio. A new arrival as of 2019, it has delivered gains of more than 39% over the past year.

• Average annual return since inception: 15.91%
• Expense ratio: 0.14%
• Top 5 holdings: Apple, Microsoft, Nvidia, Amazon.com, Facebook Inc. Class A
• Fund exclusion areas: Adult entertainment, alcohol, tobacco, cannabis, gambling, military weapons, civilian firearms, nuclear power, and coal, oil and gas

Parnassus Core Equity Fund Investor Shares (PRBLX)

Parnassus is a longtime player in the ESG movement, and the firm has developed some of the industry’s top research and literature on the subject. Its stated mission for PRBLX is to achieve capital appreciation and current income by investing in a portfolio of about 40 large-cap U.S. stocks that managers identify as having the potential to compound value. Its expense ratio is an uninspiring 0.82%, but it has beaten the S&P overall since 1992. As of Nov. 1, it had returned over 16% year to date.

• Average annual return since inception: 11.42%
• Expense ratio: 0.82%
• Top 5 holdings: Microsoft, Nvidia, Amazon.com Inc., Alphabet Inc., Class A, Realty Income Corp.
• Fund exclusion areas: Not specified

Fidelity Sustainability Bond Index (FNDSX)

Bond investors with a slant toward ESG ETFs have plenty of options. Among the best is FNDSX, which tracks the Bloomberg MSCI U.S. Aggregate ESG Choice Bond Index. Its expense ratio is a low 0.10%, but make sure you can handle the volatility of the bond market before you put your money down. Foreign securities make up over 7% of the portfolio.

• Average annual return since inception: 1.34%
• Expense ratio: 0.10%
• Top 5 holdings: U.S. Treasury, U.S. agency, other government-related, corporate
• Fund exclusion areas: N/A

What Is ESG Investing?

ESG investing is the selection of investments based at least in part on a company’s environmental, social and governance standards and policies. Other terms for it include sustainable investing, socially responsible investing and impact investing.

Many ESG funds exclude companies that participate in controversial business practices or markets. For example, a fund might screen out companies involved in adult entertainment, cannabis, consumer firearms, fossil fuels, gambling, military weapons and/or tobacco. Other funds specifically seek out companies that support diversity, environmental sustainability and other socially responsible activities.

When you invest in ESG funds, you align your investment activities with your values.

How Do ESG Funds Work?

All funds have certain objectives. In the case of ESG funds, those objectives include investing in companies committed to socially responsible practices and/or excluding companies that don’t share that commitment.

Just like with other funds, ESG funds can track an index, or they can be professionally managed. Funds that track an index try to mimic the performance of that index. It’s a hands-off approach.

Managed funds try to beat their benchmarks. However, some fund objectives prioritize ESG characteristics over financial performance. The thinking is that those holdings’ socially responsible practices will eventually pay off with strong returns.

How To Choose an ESG Fund

With about 50 ESG ETFs to choose from, according to ETF.com, it’s a good idea to take a strategic approach to choosing the funds that check the most boxes for you.

1. Select an ESG screening tool that allows you to filter ETFs by ESG scores. VettaFi’s screener, for example, gives you a score range of 1 to 10 to choose from. If you have a brokerage account, you might be able to search ESG ETFs there.
2. Next, decide whether you want an actively managed fund or an index fund.
3. Select any other criteria that are important to you, such as asset class, minimum/maximum expense ratio, dividend characteristics and performance.
4. Once you’ve narrowed the choices to a manageable number, read through each fund’s information page on the issuer’s website. That gives you a summary of the fund’s objectives and strategies — whether it invests only in securities that meet its ESG standard or mixes ESG and non-ESG securities, for example, and whether it prioritizes adherence to ESG standards over performance. The information page also provides details about expenses, performance and holdings.
5. If you don’t already have a brokerage account, you’ll need to open one before you can place your order. Once done, search for the ETF on the brokerage website and follow the prompts to purchase your shares.

Daria Uhlig and Cynthia Measom contributed to the reporting for this article.

Information is accurate as of Nov. 1, 2024. 

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