Investing with a conscience is more than a trend, it’s a smart strategy. In 2023, the best ESG ETFs to buy are not just ethical choices, they’re financially sound ones too. These funds represent the forefront of the investment landscape, offering both sustainability and profitability.
The world’s transition from thermal coal burning to more sustainable solutions has opened people’s eyes. Investors are becoming more socially-conscious too, now more than ever.
The transition from conventional to responsible investing is not just a trend. It’s a movement. Join us as we uncover the top ESG ETFs of 2023, a testament to the power of investing with purpose and performance in mind.
Vanguard ESG U.S. Stock ETF (ESGV)
The Vanguard ESG U.S. Stock ETF (BATS:ESGV) is a prominent choice for those looking to invest in an ESG-compliant fund. With nearly 1,500 holdings, primarily from the U.S., this ETF maintains a diversified portfolio that aligns with ESG principles. The index is up 19% year-to-date (YTD), making it a strong pick. It has an expense ratio of 0.09%.
There are some reasons why ESG investors should consider ESGV. First, the ETF abstains from investing in sectors such as adult entertainment, alcohol, tobacco, cannabis, gambling and weapons. It also excludes companies that don’t meet specific human rights and anti-corruption standards.
Furthermore, it abstains totally from investing in the energy sector. This is due to the prevalence of coal-burning companies in this sector. Instead, it has significant investments in technology (28%), health care (16%), financial services (15%), and consumer cyclical (12%).
Gabelli Love Our Planet & People ETF (LOPP)
The Gabelli Love Our Planet & People ETF (NYSEARCA:LOPP) is unique in its approach to ESG investing, with an expense ratio of 0%. It represents a commitment to environmental and social principles, making it an attractive option for investors looking to align their portfolios with their values. The ETF is up nearly 4% YTD.
Another unique feature of LOPP is that it does not disclose which assets they hold each day. The strategy of maintaining secrecy around the fund’s investments may enhance performance by avoiding prediction and replication by other traders.
LOPP has a multi-faceted strategy for investing in companies. It claims to:
“invest in companies committed to sustainable practices such as renewable energy and the reduction or recycling of long-lived wastes such as plastics. The LOPP team has extensive experience researching and investing in companies involved in forward-looking sectors including renewable power generation, electric transmission and storage, electric mobility, waste reduction and recycling, water conservation and treatment and human nutrition throughout the world.”
LOPP’s broad diversification helps make it one of the best ESG ETFs to buy.
Vanguard Total Stock Market ETF (VTI)
With an expense ratio of 0.03%, the Vanguard Total Stock Market ETF (NYSEARCA:VTI) is another low-cost ESG option. It offers broad exposure to the U.S. stock market, adhering to the principles of environmental, social and governance.
This ETF’s broad market approach signifies a shift in ESG investing from niche to mainstream. It reflects a growing understanding that responsible investing doesn’t have to be confined to specific sectors or companies but can be integrated across an entire portfolio.
The ETF is also a strong performer, as it’s currently up over 16% YTD. Morningstar rates VTI highly on many metrics important to ESG investors. It particularly excels in the social category. Another plus is that it also received a 100% corporate sustainability contribution.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
