21 Best ESG ETFs: 1 & 5-Year ETF Performance vs. S&P 500

ESG Investing is Surging in 2020, ESG ETFs Are A Top Performing ETF Category. We Detail the Best Performing Ethical ETFs vs. SP500 5-Year Returns

We detail the best ESG ETFs based on comparative performance against the S&P 500 on both a 1-year and 5-year benchmark. You will see the inevitable move to clean energy and social and ethical investment has begun, and how you can get on board. 

ESG investing is surging right now, and we are bearing witness to the end of the oil age. The Economist reported, ” Investment in oil supply has collapsed” this is due to the fundamental paradigm shift to remote working and a more climate aware population.  This has inevitably lead to a surge of capital into clean energy stocks in 2020.

ESG ETFs: The Best ESG ETFs Based On Performance vs S&P500
ESG ETFs: The Best ESG ETFs Based On Performance vs S&P500

What is ESG Investing?

ESG investing (Environmental, Social & Governance) enables ethical investors to channel their capital to companies that demonstrate environmental sustainability, social responsibility, and good corporate governance. ESG investing can be done by investing in specific companies or by investing in some of the new ESG funds.

ESG Investing Definition & Principles

EnvironmentSocialGovernance
Air QualityLabor PolicyExecutive Pay
Green EnergyCommunity ImpactEthical Practices
Waste MgtEqual EmploymentTransparency
Hazardous MaterialsEqual OpportunityAccounting & Taxes

5 Reasons to Invest In ESG ETFs

In case you did not realize it, Ethical & Social investing (ESG) is hot at the moment. Looking logically at the overall market, we see potent fundamental factors pushing these sectors forward.

Market Outperformance

Let the numbers speak for themselves. The majority of ESG ETFs Beat the S&P 500 Returns.  In the ESG ETF list below, you can see that 19 of the 21 ESG ETFs on the US exchanges outperformed the S&P 500 index in 2020. Not only that but 10 of the ETF significantly performed, beating the S&P500 by more than 20%.

Climate Change & Sustainability

Climate change and the sustainability of our lives and our ecosystem are becoming top of mind for consumers, and this reflects on the profitability of ESG companies.  More and more people are opting for organic produce, and diet shifting towards vegetarianism. More people want to buy electric cars or even avoid commuting altogether. The governmental push towards solar, winds, and other forms of renewable energy is undeniable.

ESG Companies Are A Safer Bet

ESG is not solely about the external environment; it is also concerned with good corporate governance. ESG investors try to encourage responsible corporate governance by only investing in corporations they consider ethical. These investors look for ethical business practices. Many ESG investors refuse to invest in tobacco companies or weapons manufacturers, for instance.

Some “Ethical Business Practices” are easily understood. Refusing to engage in bribery or break the law, for instance. If a company has an ESG policy that it actively pursues, this reduces your risk as an investor, as ultimately, there are less risk of scandals and corruption charges that could affect the business.

Supporting a Fairer More Equal Society

Not engaging in discrimination is a basic tenet of ESG investing. Companies that offer equal opportunities regardless of race, sex, religion, and sexual orientation are responsible. The obvious example of equal employment is the number of women, people of color, and minorities working at a company. Another sign of equal opportunity is a lack of discrimination lawsuits. An example of equal opportunity is McDonald’s (NYSE: MCD) efforts to make franchise opportunities available to minorities.

Many American companies encourage diversity by offering college scholarships to people of color. McDonald’s is one of many American companies that offer scholarships to minority employees. Having a strong diversity policy will not guarantee social responsibility. A socially responsible company enforces and practices its diversity policy.

Best ESG ETFs List

TickerETF Name1-Year Return vs. S&P 5005-Year Return vs. S&P 500Expense RatioNet Assets ($M)
TANInvesco Solar ETF131.60%56.00%0.71%$1,547
PBWInvesco WilderHill Clean Energy ETF125.40%136.40%0.70%$742
QCLNFirst Trust NASDAQ Clean Edge Green Energy Index Fund119.10%150.60%0.60%$546
PBDInvesco Global Clean Energy ETF84.00%40.00%0.75%$106
ICLNiShares Global Clean Energy ETF76.50%39.60%0.46%$1,541
SMOGVanEck Vectors Low Carbon Energy ETF73.30%49.30%0.62%$157
FANFirst Trust Global Wind Energy ETF28.10%7.50%0.62%$205
PZDInvesco Cleantech ETF23.30%39.70%0.65%$295
SDGiShares MSCI Global Impact ETF21.60%0.49%$183
NULGNuveen ESG Large-Cap Growth ETF20.10%0.35%$348
NUMGNuveen ESG Mid-Cap Growth ETF19.20%0.40%$181
LRGEClearBridge Large Cap Growth ESG ETF15.20%0.59%$114
CACGClearBridge All Cap Growth ETF8.10%0.54%$181
SUSAiShares MSCI USA ESG Select ETF7.50%10.70%0.25%$1,743
ESGUiShares ESG Aware MSCI USA ETF3.80%0.15%$8,814
DSIiShares MSCI KLD 400 Social ETF2.40%1.50%0.25%$2,157
ESGFlexShares STOXX US ESG Impact Index Fund1.60%0.32%$87
SPYXSPDR S&P 500 Fossil Fuel Reserves Free ETF1.40%0.20%$667
CATHGlobal X S&P 500 Catholic Values ETF0.70%0.29%$387
PHOInvesco Water Resources ETF0.00%5.40%0.60%$1,097
ETHOEtho Climate Leadership U.S. ETF-0.30%0.47%$90

Table: Top 21 Performing ESG ETFs. All Data & Research Performed With Stock Rover, Our Favorite Stock & ETF Research, Screening & Portfolio Management Tool.  Read the Stock Rover Review

Top 6 Best Performing ESG ETFs

Invesco Solar ETF

  • 1-Year Return vs. S&P 500: +131%
  • 5-Year Return vs. S&P 500: +56%
  • Morningstar Rating: ★
  • Net Assets ($M): $1,547
  • Average Volume (3m): 1,036,571
  • Expense Ratio: 0.71%
  • Manager Tenure: 2.47 years
  • Issuer: Invesco

Invesco Solar ETF Performance Chart

Invesco Solar ETF Performance Chart
Invesco Solar ETF Performance Chart: Research Performed With Stock Rover, Our Favorite Stock & ETF Research, Screening & Portfolio Management Tool.  Read the Stock Rover Review

Invesco Solar ETF Details

The Invesco Solar ETF seeks to track the investment results (before fees and expenses) of the MAC Global Solar Energy Index (the “underlying index”). The fund will invest at least 90% of its total assets in the securities (including ADRs and GDRs) that comprise the underlying index.

The underlying index is designed to provide exposure to companies listed on exchanges in developed markets that derive a significant amount of their revenues from the following business segments of the solar industry: solar power equipment producers, including ancillary or enabling products. It is a socially responsible index fund.

Invesco WilderHill Clean Energy ETF

  • 1-Year Return vs. S&P 500: +125%
  • 5-Year Return vs. S&P 500: +136%
  • Morningstar Rating: ★
  • Net Assets ($M): $742
  • Average Volume: (3m) 240,394
  • Expense Ratio: 0.70%
  • Manager Tenure: 13.34 years
  • Issuer: Invesco

Invesco WilderHill Clean Energy ETF Performance Chart

Invesco WilderHill Clean Energy ETF Performance Chart
Invesco WilderHill Clean Energy ETF Performance Chart. Research Performed With Stock Rover, Our Favorite Stock & ETF Research, Screening & Portfolio Management Tool.  Read the Stock Rover Review

Invesco WilderHill Clean Energy ETF Details

The Invesco WilderHill Clean Energy ETF seeks to track the investment results (before fees and expenses) of the WilderHill Clean Energy Index (the “underlying index”). The fund generally will invest at least 90% of its total assets in the securities that comprise the underlying index. The underlying index comprises stocks of publicly-traded companies in the United States that are engaged in the business of the advancement of cleaner energy and conservation.

Stocks are included in the underlying index based on the index provider’s evaluation that such companies will substantially benefit from a societal transition toward the use of cleaner energy and conservation. It is a socially responsible index fund.

First Trust NASDAQ Clean Edge Green Energy Index Fund

  • 1-Year Return vs. S&P 500: +119%
  • 5-Year Return vs. S&P 500: +150%
  • Morningstar Rating: ★★
  • Net Assets ($M): $546
  • Average Volume (3m): 227,814
  • Expense Ratio: 0.60%
  • Turnover Ratio: 26.0%
  • Manager Tenure: 13.65 years
  • Issuer: First Trust

First Trust NASDAQ Clean Edge Green Energy Index Fund Chart

First Trust NASDAQ Clean Edge Green Energy Index Fund Performance Chart
First Trust NASDAQ Clean Edge Green Energy Index Fund Performance Chart. Research Performed With Stock Rover, Our Favorite Stock & ETF Research, Screening & Portfolio Management Tool.  Read the Stock Rover Review

First Trust NASDAQ Clean Edge Green Energy Index Fund Details

The First Trust NASDAQ Clean Edge Green Energy Index Fund seeks investment results that generally correspond to the price and yield (before the fund’s fees and expenses) of an equity index called the NASDAQ Clean Edge Green Energy IndexSM. The fund will normally invest at least 90% of its net assets (including investment borrowings) in the common stocks and depositary receipts that comprise the index.

The index is designed to track the performance of small, mid, and large-capitalization clean energy companies that are publicly traded in the United States.

Invesco Global Clean Energy ETF

  • 1-Year Return vs. S&P 500: +84%
  • 5-Year Return vs. S&P 500: +40%
  • Morningstar Rating: ★
  • Net Assets ($M): $106
  • Average Volume: (3m) 49,672
  • Expense Ratio: 0.75%
  • Manager Tenure: 13.31 years
  • Issuer: Invesco

Invesco Global Clean Energy ETF Performace Chart

Invesco Global Clean Energy ETF Performance Chart
Invesco Global Clean Energy ETF Performance Chart. Research Performed With Stock Rover, Our Favorite Stock & ETF Research, Screening & Portfolio Management Tool.  Read the Stock Rover Review

Invesco Global Clean Energy ETF Details

The Invesco Global Clean Energy ETF seeks to track the investment results (before fees and expenses) of the WilderHill New Energy Global Innovation Index (the “underlying index”). The fund generally will invest at least 90% of its total assets in the securities that comprise the underlying index, as well as American depositary receipts (“ADRs”) and global depositary receipts (“GDRs”) that represent securities in the underlying index.

The underlying index is comprised primarily of companies whose technologies focus on the generation and use of cleaner energy,

iShares Global Clean Energy ETF

  • 1-Year Return vs. S&P 500: +77%
  • 5-Year Return vs. S&P 500: +40%
  • Morningstar Rating: ★
  • Net Assets ($M): $1,541
  • Average Volume (3m): 2,337,813
  • Expense Ratio: 0.46%
  • Turnover Ratio: 42.0%
  • Manager Tenure: 12.28 years
  • Issuer: iShares

iShares Global Clean Energy ETF Performance Chart

iShares Global Clean Energy ETF Performance Chart
iShares Global Clean Energy ETF Performance Chart. Research Performed With Stock Rover, Our Favorite Stock & ETF Research, Screening & Portfolio Management Tool.  Read the Stock Rover Review

iShares Global Clean Energy ETF Details

The iShares Global Clean Energy ETF seeks to track the S&P Global Clean Energy IndexTM. The fund generally invests at least 90% of its assets in the component securities of the index and in investments that have economic characteristics that are substantially identical to the component securities and may invest up to 10% of its assets in certain futures, options, and swap contracts, cash, and cash equivalents, as well as in securities not included in the index.

VanEck Vectors Low Carbon Energy ETF

  • 1-Year Return vs. S&P 500: +73%
  • 5-Year Return vs. S&P 500: +49%
  • Morningstar Rating: ★
  • Net Assets ($M): $157
  • Average Volume (3m): 6,277
  • Expense Ratio: 0.62%
  • Turnover Ratio: 40.0%
  • Manager Tenure: 13.42 years
  • Issuer: VanEck

VanEck Vectors Low Carbon Energy ETF Performance Chart

VanEck Vectors Low Carbon Energy ETF Performance Chart
VanEck Vectors Low Carbon Energy ETF Performance Chart. Research Performed With Stock Rover, Our Favorite Stock & ETF Research, Screening & Portfolio Management Tool.  Read the Stock Rover Review

VanEck Vectors Low Carbon Energy ETF Details

The VanEck Vectors Low Carbon Energy ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Ardour Global IndexSM (Extra Liquid). The fund normally invests at least 80% of its total assets in stocks of low carbon energy companies.

Such companies may include small- and medium-capitalization companies and foreign issuers.

ESG ETF Investing Summary

The move has started; the oil industry’s near-collapse, the rise of the electric car, and the focus on Wind, Solar, and clean air are driving the ESG investing capital inflows. In addition to that, investing in ESG stocks is not only profitable but also the right thing to do to help push more companies into cleaning up their operations and treating workers and communities with respect.

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