ESGU vs ISMD

ESGUAiShares ESG Aware MSCI USA ETF

ISMDCInspire Small/Mid 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.

ISMD A values screen most investors meet in large-cap form, aimed instead at US small and mid caps. Running since 2017, it tracks an index built on Inspire's own Impact Score, so the screening is rules-based rather than a manager's judgment call.

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.

ISMD The Fund seeks to replicate, before fees and expenses, the performance of the Inspire Small/Mid Cap Impact Index.

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.

• ISMD The values filter is codified. It tracks the Inspire Small/Mid Cap Impact Index, screened by the Inspire Impact Score, so exclusions follow published rules instead of a manager's discretion.
• Screening doesn't hollow out the portfolio. Holdings construction and diversification are the fund's strongest measured trait, well ahead of where its overall standing sits.
• No mandate drift. It stays what the prospectus says it is: a US equity fund in the small and mid cap range, tracking its stated index rather than wandering into large caps.
• Live since 2017 and now in the $250M to $1B range, with quarterly distributions. That's past the fragile startup stage for a niche screened strategy.

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

• ISMD The screen carries a price. At 0.53%, it costs meaningfully more than the plain broad-market trackers in its peer group, such as ILCB and GUSA.
• It's thinly traded, so bid-ask spreads can be wider than on the giant index funds it sits beside.
• Small and mid caps swing harder than large caps, and the screen narrows the pool further. Expect a bumpier ride than a total-market fund.

Full ESGU profile⁠

Full ISMD profile⁠