3 ETFs Combining Market-Beating Performance and ESG Goals

No longer reserved for niche investment strategies, Environmental, Social, and Governance (ESG) principles are on track to become a major consideration for investors as climate change, geopolitics, and energy usage become increasingly important to companies across sectors. PricewaterhouseCoopers has predicted that ESG will continue to be a dominant feature in exchange-traded fund (ETF) launches. ESG ETFs allow investors to focus on companies prioritizing sustainability and other ESG goals without having to manage and oversee each firm's compliance with these principles.

While ESG is an important consideration for many investors, an ESG investment is compelling only if it can also deliver outstanding performance. Fortunately, there are already a number of ETFs focused on ESG ideals poised to continue beating the market heading into the new year.

Non-U.S. Focus Provides Diversification, But Liquidity May Be an Issue for EASG

The Xtrackers MSCI EAFE Selection Equity ETF (NYSEARCA: EASG) looks at the universe of ESG-focused companies in developed markets outside of North America. EASG targets the MSCI EAFE Selection Index, an index of mid- and large-cap companies meeting ESG criteria—however, the ETF goes beyond the initial screen to focus only on those firms within the index in the top 50% by market cap.

The result is a portfolio of around 350 names that leans toward financials, industrials, and information technology sectors.

Japanese companies represent around a quarter of the portfolio, followed by the United Kingdom, France, and others across Europe and Asia. EASG's basket is thus more diversified than some other ESG-focused ETFs. 

However, it has relatively low assets under management (AUM) of just $65 million, and one-month average trading volume around 4,100, both of which may raise liquidity concerns for investors taking a more active approach to trading.

Investors may very well be inclined to hold on to the EASG, however, if it keeps up its recent performance. The fund provided returns of 28.5% in the last year, alongside a compelling dividend yield of 4.11% and a comparably low expense ratio of 0.14%.

Similar Approach to EASG, But Better Liquidity and Returns Alongside Higher Fees

Adopting a strategy very similar to EASG above, the Nuveen ESG International Developed Markets Equity ETF (BATS: NUDM) also identifies ESG stocks from developed markets outside of the United States and Canada.

For a somewhat higher fee of 0.28%, investors gain access via NUDM to a more narrowly focused group of 157 stocks from countries including the United Kingdom, Switzerland, Germany, and France.

Financials and industrials names similarly make up the largest portions of the portfolio, followed by healthcare and information technology.

Due to the overlap between EASG and NUDM, investors would likely choose either one or the other.

While NUDM is costlier, it also has a stronger performance record in recent quarters, having returned 32.3% in the last year.

While not quite as high as EASG's, NUDM's dividend yield is a healthy 2.72%, making it also a strong source of distributions. Another key advantage NUDM has over EASG is in its liquidity: the fund has around $636 million in AUM and a one-month average trading volume of 103,000. Neither is particularly high compared with popular non-ESG funds, but these figures do give NUDM a leg up on EASG.

Competitive Semiconductor ETF With Strong Returns

For a different focus within the realm of ESG, investors might look to the Xtrackers Semiconductor Select Equity ETF (NASDAQ: CHPS). CHPS looks at companies in the semiconductor industry that also meet sustainability criteria. It may not surprise investors to learn that this yields a small portfolio of just over 50 positions. Nearly two-thirds of the portfolio consists of U.S. stocks, with Asian companies accounting for about a quarter.

Investors will find many of the biggest global names in semiconductors in this fund's basket, including NVIDIA Corp. (NASDAQ: NVDA), SK hynix Inc., and ASML Holding N.V. (NASDAQ: ASML).

This makes CHPS a fairly good overall semiconductor ETF, with added peace of mind for investors keen to make sure all holding meet ESG requirements. Its expense ratio of 0.15% also makes it one of the cheaper options in the space. 

CHPS has already returned more than 14% since the start of 2026, and is up an impressive 71.7% in the last 12 months.

What investors will sacrifice in this fund, as compared with other larger semiconductor ETFs, however, is liquidity: CHPS has AUM of under $24 million and a one-month average trading volume of around 15,000.

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