The iShares ESG Aware MSCI USA ETF (ESGU) is an exchange-traded fund that seeks to track the investment results of the MSCI USA Extended ESG Focus Index. This index is composed of U.S. companies exhibiting positive environmental, social, and governance (ESG) characteristics, while maintaining risk and return profiles similar to the broader MSCI USA Index.

Fund Overview

  • Inception Date: December 1, 2016
  • Expense Ratio: 0.15%
  • Net Assets: Approximately $14.2 billion as of February 7, 2025
  • Number of Holdings: 284

Performance

As of January 31, 2025, ESGU has delivered the following returns:

  • 1-Year Return: 24.33%
  • 3-Year Annualized Return: 7.64%
  • 5-Year Annualized Return: 14.13%

These figures indicate that ESGU has performed comparably to traditional large-cap U.S. equity indices over these periods.

Dividend Information

ESGU offers a dividend yield of approximately 1.16%, with an annual dividend of $1.52 per share. Dividends are distributed quarterly, with the most recent ex-dividend date on December 17, 2024.

Top Holdings

As of January 31, 2025, the top holdings in ESGU include:

  1. Apple Inc. (AAPL) – 6.52%
  2. NVIDIA Corporation (NVDA) – 5.58%
  3. Microsoft Corporation (MSFT) – 5.55%
  4. Amazon.com, Inc. (AMZN) – 4.22%
  5. Alphabet Inc. (GOOG) – 3.44%

These top five holdings constitute approximately 25.31% of the fund’s total assets, indicating a significant concentration in major technology companies.

Sector Allocation

ESGU’s sector distribution closely mirrors that of the broader U.S. equity market, with notable allocations in:

  • Information Technology: Approximately 30%
  • Health Care: Approximately 13%
  • Consumer Discretionary: Approximately 12%
  • Financials: Approximately 11%
  • Communication Services: Approximately 9%

This diversified sector exposure aligns with ESGU’s objective to provide broad market coverage while emphasizing companies with favorable ESG characteristics.

Investment Considerations

ESGU offers investors exposure to large- and mid-cap U.S. stocks with positive ESG attributes, aiming for performance comparable to traditional benchmarks. The fund’s low expense ratio of 0.15% enhances its appeal to cost-conscious investors. However, the significant weighting in technology companies may lead to sector-specific risks. Additionally, while ESGU applies ESG criteria in its selection process, some critics argue that its holdings closely resemble those of standard indices, potentially limiting the distinctiveness of its ESG focus.

In summary, ESGU provides a viable option for investors seeking ESG-integrated exposure to the U.S. equity market, balancing sustainability considerations with financial performance.