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ESG ETFs: Doing Good & Beating the Market

Neena Mishra

2019 was an excellent year for ESG ETFs that invest in companies with strong environmental, social and governance practices. They attracted record inflows and also delivered solid performance.

Many investors think that ethical investing means scarifying some returns, but last year, some of these ETFs were able to beat the broader market and most provided comparable returns.

Investors now have access to a number of broad equity and bond ESG ETFs that can be used as portfolio building tools.

These ETFs typically exclude weapon manufacturers, casino operators, alcohol and tobacco companies, but some of these funds still include energy companies that score high on social and governance metrics.

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The iShares MSCI KLD 400 Social ETF (DSI) holds 400 US companies with outstanding ESG ratings and excludes companies whose products have negative social or environmental impacts. Top holdings in the fund include Microsoft (MSFT) and Facebook (FB). It gained 29% over the past year.

The SPDR S&P 500 Fossil Fuel Reserves Free ETF (SPYX) eliminates companies that own fossil fuel reserves, from the S&P 500 index. Apple (AAPL) and Microsoft are its top holdings. SPYX was up 30% in the past 12 months.

The Nuveen ESG Large-Cap Growth ETF (NULG) holds large-cap growth stocks that satisfy certain ESG criteria. Microsoft and Google (GOOGL) are its top holdings. NULG retuned 38% over the past year.

The Invesco WilderHill Clean Energy ETF (PBW) invests in companies that advance cleaner energy and conservation. Enphase Energy (ENPH), Solar Edge (SEDG) and Tesla (TSLA) are among its holdings.

To learn more about these ETFs, please watch the short video above.

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iShares MSCI KLD 400 Social ETF (DSI): ETF Research Reports
 
SPDR S&P 500 Fossil Fuel Reserves Free ETF (SPYX): ETF Research Reports
 
Facebook, Inc. (FB) : Free Stock Analysis Report
 
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
Invesco WilderHill Clean Energy ETF (PBW): ETF Research Reports
 
SolarEdge Technologies, Inc. (SEDG) : Free Stock Analysis Report
 
Enphase Energy, Inc. (ENPH) : Free Stock Analysis Report
 
Nuveen ESG Large-Cap Growth ETF (NULG): ETF Research Reports
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report