10 most popular ESG ETFs in 2021

Once an afterthought, Environmental, Social and Governance (ESG) investing has ballooned into a whole new universe through ETFs. After amassing a record $168 billion of net inflows in 2021, we take a look at the most popular ESG ETFs in Americas and in Europe.

ESG ETFs in Americas

Here are the top 10 ESG ETFs in Americas based on year-to-date net inflows:

1. iShares ESG Aware MSCI USA ETF (ESGU) - $8.21 billion
2. iShares ESG Aware MSCI EAFE ETF (ESGD) - $3.24 billion
3. iShares Global Clean Energy ETF (ICLN) - $2.82 billion
4. Global X Lithium & Battery ETF (LIT) - $2.59 billion
5. Vanguard ESG U.S. Stock ETF (ESGV) - $2.4 billion
6. iShares MSCI USA ESG Select ETF (SUSA) - $1.67 billion
7. Quadratic Interest Rate Volatility and Inflation Hedge ETF (IVOL) - $1.66 billion
8. Vanguard ESG International Stock ETF (VSGX) - $1.54 billion
9. BlackRock U.S. Carbon Transition Readiness ETF (LCTU) - $1.44 billion
10. KraneShares Global Carbon Strategy ETF (KRBN) - $1.182 billion

Leading the ESG ETF pack: iShares ESG Aware MSCI USA ETF

Topping the list by a wide margin is the iShares ESG Aware MSCI USA ETF (ESGU) with a whopping $8.2 billion in net inflows this year. The fund tracks the MSCI USA Index but with an ESG twist and invests in large and mid-cap U.S. stocks with high ESG ratings. ESGU also filters out businesses involved in civilian firearms, controversial weapons, tobacco, thermal coal and oil sands.

As of December 28th, 2021, Information technology (30.83%) has the largest slice in sector allocations, followed by Health Care (12.76%), Consumer Discretionary (12.21%), Financials (10.08%), Communication (9.38%) and Industrials (8.33%) among other.

The leading 10 names make up about 28% of net assets of $25.6 billion. Apple Inc. (6.7%), Microsoft Corp. (5.87%), Amazon.com Inc. (3.56%), Tesla Inc. (2.15%), Alphabet Inc. Class C (1.96%), Alphabet Inc. Class A (1.95%), Nvidia Corp. (1.88%), Meta Platforms Inc. (1.71%), JPMorgan Chase & Co. (1.29%) and Home Depot (1.18%), are among the top names in the fund.

ESG ETFs in Europe

On the European front, the following 10 ESG ETFs attracted the most net inflows: 

1. SPDR Bloomberg SASB U.S. Corporate ESG UCITS ETF (SPPU): $5.61 billion
2. iShares MSCI USA SRI UCITS ETF (SUAS): $2.66 billion
3. Amundi Index MSCI USA SRI - UCITS ETF (USRI): $2.36 billion
4. Xtrackers MSCI USA ESG UCITS ETF (WZMU): $2.36 billion
5. iShares MSCI USA ESG Enhanced UCITS ETF (EDMU): $2.19 billion
6. iShares MSCI USA ESG Screened UCITS ETF (SASU): $1.98 billion
7. iShares Global Clean Energy UCITS ETF (INRG): $1.97 billion
8. iShares MSCI World SRI UCITS ETF (SUSW): $1.90 billion
9. iShares MSCI EM SRI UCITS ETF (SUSM): $1.87 billion
10. iShares € Corp Bond SRI 0-3yr UCITS ETF (SUSE): $1.72 billion

Leading the ESG ETF pack: SPDR Bloomberg SASB U.S. Corporate ESG UCITS ETF

SPDR Bloomberg SASB U.S. Corporate ESG UCITS ETF is a fixed income ETF which seeks to replicate Bloomberg SASB U.S. Corporate ESG Ex-Controversies Select Index, an investment grade, fixed-rate, U.S. dollar denominated benchmark. It provides exposure to an array of corporate bonds that have different maturities and ratings. An ESG screener is applied to at least 90% of the portfolio. It is expected to have a higher ESG rating than the Bloomberg Barclays U.S. Corporate Bond Index, after filtering out 20% of the lowest ESG rated bonds from the index.

In terms of sector allocation, Industrial corporate bonds have the highest allocation (62.4%), followed by Financials (30.7%) and Utilities (6.3%). The United States has the biggest exposure (72.75%). Next in line is the United Kingdom (10.35%) and Canada (5.94%). The fund has current yield of 3.28% and an average maturity of 12.2 years. As for the credit quality breakdown, "Baa" rated bonds (47.7%) have the largest share, followed by "A" rated bonds (42.11%) and "Aa" rated bonds (7.65%).

The fund has an expense ratio of 0.15% and trades on multiple exchanges, including Deutsche Börse (SPPU, in EUR), London Stock Exchange (USCR, in USD), SIX Swiss Exchange (USCR, in USD) and Bolsa Mexicana de Valores (USCRN, in MXN).

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