Explore ESG Funds’ Value
When we talk about the best ESG funds, we’re referring to offerings that blend potential returns with values-based investing. These funds emphasize companies that align with environmental, social, and governance principles, such as reducing carbon footprints or improving boardroom diversity. They’ve surged in popularity, reflecting an increased focus on sustainable investing and ethical business practices.
You might be asking: “What are the best ESG funds, how do we choose them, what are their fees, which ones have the best returns, and can they align with our family’s values?” It’s a lot to consider, especially if you have a high net worth and want to preserve wealth while making a positive impact. According to data from Morgan Stanley, sustainable funds can dip below traditional funds in the short run. Yet, over the long haul, they’ve historically outperformed, turning a hypothetical $100 investment in 2018 into $136 by 2024.
Review Our Current Favorites
Below, we’ve rounded up five ESG funds that have captured attention. We based this list on performance data, expense ratios, and focus areas. Performance figures in the table reference the most recent data from Nerdwallet.
| Fund Name | Performance (YTD) | Expense Ratio | Focus |
| Stance Sustainable Beta ETF | 71.86% | N/A | Broad ESG approach with a diversified basket |
| Franklin Responsibly Sourced Gold ETF | 39.02% | N/A | Metals fund emphasizing responsible sourcing |
| TCW Transform 500 ETF | N/A | 0.05% | Low-cost fund tracking ESG-screened US stocks |
| iShares ESG Select Screened S&P 500 ETF | N/A | 0.08% | Large-cap US stocks with exclusions |
| Xtrackers MSCI USA Climate Action Equity ETF | N/A | 0.07% | Climate-focused investment strategy |
- Stance Sustainable Beta ETF
This high performer focuses on a broad range of socially responsible firms. It aims for a balanced approach that keeps volatility in check. - Franklin Responsibly Sourced Gold ETF
Ideal for those who see gold as a hedge against inflation, but want assurances that extraction and sourcing meet ethical standards. - TCW Transform 500 ETF
With one of the lowest expense ratios in the ESG space, this ETF invests in large-cap companies screened for environmental or social risks. - iShares ESG Select Screened S&P 500 ETF
A familiar S&P 500 strategy but excludes companies that fail to meet ESG criteria. This can be a solid addition to a core portfolio. - Xtrackers MSCI USA Climate Action Equity ETF
If you’re especially concerned about carbon footprints, this fund focuses on firms with clear climate initiatives and lower emissions.
Recognize Key Selection Criteria
We believe that evaluating ESG funds goes beyond glancing at performance charts. Here are a few criteria we keep in mind:
- Expense Ratios
Look for funds that don’t erode your returns with high costs. Passively managed ETFs usually have lower expense ratios compared to active funds. - Long-Term Track Record
While high performance in a single year is enticing, we consider consistency. The data from Morgan Stanley suggests ESG strategies often grow stronger when viewed across multiple years. - Values Alignment
Some funds exclude fossil-fuel-focused companies or maintain diversity benchmarks. If you’re serious about robust sustainable investment strategies, check how each fund’s ESG criteria match your beliefs. - Diversification
Even the best ESG funds carry risk. Holding different types of assets (like equities, bonds, or alternatives) may help protect your wealth. We often pair equities with other options, such as impact investing solutions or ethical stocks, to balance potential ups and downs.
Shape Our Next Steps
If you’re ready to refine your portfolio, start by identifying which ESG factors matter most to you. Compare expense ratios, historical returns, and the fund’s ESG guidelines. You could also explore specialized approaches, such as impact investing firms or what is sri, to narrow your search further.
We see ESG as a chance to align our money with our principles. It can involve short-term trade-offs, but many investors find the long-term gains—both financially and ethically—worth it. Whether you lean toward low-cost funds or those with a niche environmental focus, ESG investing provides a thoughtful path to grow wealth while supporting causes that matter.
Feel free to share your experiences or questions with us. Let’s continue discovering new ways to invest wisely and ethically. And if you want to dig deeper, check out our best investment plans resource for more guidance on building a solid, values-based portfolio.
