Investing

The Best ESG ETFs in 2022

iShares Global Clean Energy ETF (ICLN)

Best Clean Energy Fund

The iShares Global Clean Energy ETF tracks the performance of the S&P Global Clean Energy Index and invests at least 80% of its assets in companies that are part of that index. This is a relatively specialized fund but the global focus and the wide range of opportunities available within the “clean energy” focus area allow a reasonable degree of diversification.

Aside from the clean energy focus, the fund employs negative screens, with no exposure in the following categories:

  • Controversial Weapons
  • Nuclear Weapons
  • Civilian Firearms
  • Tobacco
  • UN Global Compact Violators
  • Thermal Coal
  • Oil Sands

As its name implies, this is a global fund, with 40.9% of its holdings in the US, 39% in Europe, 10.2% in Asia, 6.4% in Canada, 2.8% in Latin America, and 0.7% in the Middle East.

These are the top five holdings:

Company Percentage of Net Assets
Enphase Energy Inc. 9.13
Vestas Wind Systems 7.77
Consolidated Edison Inc. 6.25
Orsted 6.04
Solaredge Technologies Inc. 5.68

The fund has a relatively concentrated portfolio, with an unusually high 34.87% of assets concentrated on the top five holdings.

With shares in 76 companies around the world, this fund offers a diverse range of holdings within the clean energy industry and is one of the best ESG ETFs for investors who are looking for selected clean energy investments that also pass a general ESG screen. It’s not a low-cost fund, but at 0.42% its expense ratio is quite reasonable for a specialized ETF.

SPDR SSGA Gender Diversity (SHE)

Best Gender-Specific ETF

The SPDR SSGA Gender Diversity ETF invests in large companies that promote the elevation of women to executive positions.

The fund’s selection process involves scanning the 1000 largest US public companies to determine the percentages of board seats and senior executive positions (Senior VP or above). The fund limits investments to the top 10% of this sector based on this screen, with each company required to have at least one woman on the board of directors or as CEO.

This is a focused fund but the focus is not defined by the business sector or the products and services a company produces. This allows a very high degree of sector diversification.

  • Technology: 19.3%
  • Financial Services: 16.13%
  • Healthcare: 15.78%
  • Consumer Cyclical: 9.82%
  • Industrials: 9.51%
  • Communication Services: 9,32%
  • Consumer Defensive: 6.86%

The balance of the fund is divided among other sectors holding less than 5% of total assets, including Basic Materials, Energy, Real Estate, and Utilities.

The fund is heavily US-focused, with 98.4% of holdings in the US. Here are the fund’s top five holdings:

Company Percentage of Net Assets
United Health Group Inc. 6.26
Visa Inc. Class A 5.21
Salesforce.com Inc. 4.37
Walt Disney Company 4.31
Netflix Inc. 3.13

The high level of diversification means that this fund effectively tracks the US large-cap market, making it a solid and ESG-friendly choice for a low risk tolerance portfolio. The SPDR SSGA Gender Diversity ETF also boasts a very competitive 0.20% expense ratio, which is very low for a sector-specific ESG fund.

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