The world of investing is undergoing significant transformation as more individuals recognize the importance of their financial decisions in shaping the planet’s future. One of the most accessible ways for investors to embrace sustainability is through exchange-traded funds (ETFs) that focus on environmental, social, and governance (ESG) criteria.

To that end, ETFs such as Vanguard ESG U.S. Stock ETF (ESGV), Nuveen ESG Large-Cap Growth ETF (NULG), and iShares ESG Advanced MSCI USA ETF (USXF) could allow investors to access diversified portfolios of companies that prioritize ESG factors.

The landscape of sustainable investing continues to evolve, with companies and investors increasingly focused on decarbonization efforts and reducing environmental risks. As J.P. Morgan Asset Management points out, new policies and strategies to mitigate climate risks are broadening the scope of sustainable investing.

Bloomberg Intelligence reports that global ESG assets are expected to exceed $40 trillion by 2030, accounting for over 25% of the total assets under management (AUM). This growth highlights the rising importance of ESG considerations within the investment community.

In parallel, according to a report by Grand View Research, the global ESG investing market is projected to grow significantly in the coming years. With a market size expected to reach $28.36 trillion in 2024 and a CAGR of 18.8%, ESG investments are on track to exceed $79.71 trillion by 2030.

So, let us dive into the fundamentals of three sustainable investing ETFs that offer a greener future, starting with #3.

ETF #3: Vanguard ESG U.S. Stock ETF (ESGV)

Launched and managed by The Vanguard Group, Inc, ESGV is focused on investing in stocks of companies that are deemed socially conscious in their business dealings and directly promote environmental responsibility. The fund seeks to track the performance of the FTSE US All Cap Choice Index.

With $9.94 billion in assets under management (AUM), ESGV’s top holdings include NVIDIA Corporation (NVDA) with a 7.07% weighting, followed by Apple Inc. (AAPL) at 7.02% weighting and Microsoft Corporation (MSFT) at 6.61%. The ETF has a total of 1386 holdings, with its top 10 assets comprising 36% of its AUM.

ESGV has an expense ratio of 0.09%, lower than the category average of 0.36%. Its net inflows came in at $403.91 million over the past six months and $776.05 million over the past year.

In addition, ESGV pays an annual dividend of $1.13, which translates to a 1.06% yield at the current price level. Moreover, the fund’s dividend payouts have grown at a CAGR of 13.2% over the past five years.

ESGV has gained 15.6% over the past six months and 37.1% over the past year to close the last trading session at $106.49. The fund’s NAV was $106.45 as of November 12, 2024.

ESGV’s POWR Ratings reflect its strong prospects. The fund has an overall rating of A, translating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

ESGV has an A grade for Buy & Hold and Trade. It is ranked #23 out of 280 ETFs in the A-rated Large Cap Blend ETFs group.

To access all ESGV’s POWR Ratings, click here.

ETF #2: Nuveen ESG Large-Cap Growth ETF (NULG)

Launched and managed by Nuveen Fund Advisors, LLC and co-managed by Teachers Advisors, LLC, NULG invests in growth stocks of large-cap companies. The ETF seeks to track the performance of the Nuveen ESG USA Large-Cap Growth Index by using a full replication technique.

With an AUM of $1.58 billion, NULG’s top holdings include NVDA with a 14.49% weighting, followed by MSFT at 12.04%, and Alphabet Inc. Class A (GOOGL) at 4.48%. The ETF has a total of 60 holdings, with its top 10 assets comprising 53.19% of its AUM.

NULG’s expense ratio is 0.26%, lower than the category average of 0.36%. Its net inflows came in at $28.34 million over the past six months and $25.46 million over the past year.

NULG pays an annual dividend of $0.30, which translates to a 0.33% yield at the current price level. The fund’s dividend payouts have increased at a CAGR of 4.4% over the past three years.

NULG has surged 18.5% over the past six months and 42.3% over the past year to close the last trading session at $89.37. The fund has a NAV of $89.40 as of November 12, 2024.

NULG’s POWR Ratings reflect its robust prospects. The fund has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

It has an A grade for Buy & Hold and Trade. NULG is ranked #21 out of 61 ETFs in the A-rated Large Cap Growth ETFs group.

To check all the POWR Ratings for NULG, click here.

ETF #1: iShares ESG Advanced MSCI USA ETF (USXF)

Launched by BlackRock, Inc. (BLK) and managed by BlackRock Fund Advisors, USXF focuses on public equities, specifically investing in companies with strong social and environmental responsibility. It aims to replicate the performance of the MSCI USA Choice ESG Screened Index using a representative sampling approach.

With $1.26 billion in AUM, USXF’s top holdings are NVDA with a 17.04% weighting, followed by Broadcom Inc. (AVGO) with a 3.78% weighting, and Visa Inc. Class A (V) with a 2.30% weighting.

USXF has a total of 349 holdings, with its top 10 assets comprising 32.16% of its AUM. The fund has an expense ratio of 0.10%, lower than the category average of 0.36%. Its net inflows came in at $96.8 million over the past six months and $181.41 million over the past year.

USXF pays an annual dividend of $0.50, which translates to a 0.95% yield at the current price level. Its dividend payouts have grown at a CAGR of 16.5% over the past three years.

The ETF has gained 15.5% over the past three months and 44.3% over the past year to close the last trading session at $52.14. The fund’s NAV was $52.11 as of November 12, 2024.

USXF’s POWR Ratings reflect its strong fundamentals. The fund has an overall rating of A, equating to a Strong Buy in our proprietary rating system.

USXF has an A grade for Buy & Hold and Trade. In the B-rated All Cap Equities ETFs group, it is ranked #15 out of 169 ETFs.

Click here to see all of USXF’s POWR Ratings.

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ESGV shares were unchanged in premarket trading Wednesday. Year-to-date, ESGV has gained 26.24%, versus a 26.77% rise in the benchmark S&P 500 index during the same period.

About the Author: Aanchal Sugandh

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns. More...

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