ESGU vs ESML

ESGUAiShares ESG Aware MSCI USA ETF

ESMLBiShares ESG Aware MSCI USA Small-Cap ETF

In short

ESGU Screening out companies is easy; keeping the market's shape while you do it is the hard part. ESGU's index optimizes toward stronger ESG characteristics while targeting risk and return similar to the broad MSCI USA Index.

ESML Most ESG funds stop at the S&P 500. ESML takes the same iShares screen down the cap ladder: roughly 900 smaller US companies, ranked on ESG profile, at a price below the category median.

Stated mandate

ESGU Seeks to track an index of large- and mid-cap U.S. companies selected for favorable environmental, social and governance (ESG) characteristics while seeking risk/return similar to the MSCI USA Index.

ESML The fund seeks to track an index of small-cap U.S. companies with favorable ESG profiles, aiming to provide ESG-focused core equity exposure.

Why people hold it

• ESGU Not a screen-and-drop portfolio: the index optimizes toward better ESG characteristics while targeting risk and return similar to the broad MSCI USA Index.ishares.com
• 0.15% a year, below the typical fund in its US ESG group, spread across roughly 300 large- and mid-cap names rather than a narrow shortlist.
• Running since 2016, a multi-billion-dollar iShares fund that pays quarterly and sits in the top quartile of a crowded US ESG peer group.

• ESML Small-cap ESG is a thin shelf. The other top-graded names in the category (SNPE, EFIV, XVV) are S&P 500 builds; ESML fishes in the part of the market they skip.
• 0.17% a year, under the 0.25% category median, for an index that holds roughly 900 names rather than a short list of screen survivors.
• Live since 2018, now a multi-billion-dollar fund paying quarterly, and one of the stronger implementations in its ESG peer group.

Worth knowing

• ESGU Cheaper seats in the same row: XVV at 0.08%, ESGV at 0.09%, SNPE and EFIV at 0.10%, against 0.15% here.
• Market-like risk is the stated goal, so exclusions are lighter than a purist ESG fund and the holdings end up looking a lot like the broad US market.ishares.com
• MSCI's ratings decide who makes the cut, so the portfolio reflects one provider's definition of ESG, not an industry standard.ishares.com

• ESML These are small companies, so the ride is bumpier than the S&P 500-based ESG funds sitting next to it in the category.
• MSCI does the judging. The Extended ESG Focus index scores and re-weights companies rather than simply banning industries, so the holdings may not match your own definition.
• Volume is moderate, not the constant flow of the big large-cap ESG names, which matters more on large or hurried orders.

Full ESGU profile⁠

Full ESML profile⁠