Is iShares ESG Aware MSCI USA ETF (ESGU) a Strong ETF Right Now?

The iShares ESG Aware MSCI USA ETF (ESGU) was launched on 12/01/2016, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Growth category of the market.What Are Smart Beta ETFs?Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.Fund Sponsor & IndexESGU is managed by Blackrock, and this fund has amassed over $14.82 billion, which makes it one of the largest ETFs in the Style Box - All Cap Growth. ESGU, before fees and expenses, seeks to match the performance of the MSCI USA ESG Focus Index.The MSCI USA Extended ESG Focus Index comprises of U.S. companies that have positive environmental, social and governance characteristics while exhibiting risk and return characteristics similar to those of the parent index.Cost & Other ExpensesInvestors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.Operating expenses on an annual basis are 0.15% for ESGU, making it one of the least expensive products in the space.The fund has a 12-month trailing dividend yield of 1.29%.Sector Exposure and Top HoldingsIt is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.For ESGU, it has heaviest allocation in the Information Technology sector --about 35.4% of the portfolio --while Financials and Consumer Discretionary round out the top three.When you look at individual holdings, Nvidia Corp (NVDA) accounts for about 7.26% of the fund's total assets, followed by Microsoft Corp (MSFT) and Apple Inc (AAPL).ESGU's top 10 holdings account for about 37.31% of its total assets under management.Performance and RiskYear-to-date, the iShares ESG Aware MSCI USA ETF has added about 13.02% so far, and was up about 16.21% over the last 12 months (as of 09/25/2025). ESGU has traded between $108.06 $145.86 in this past 52-week period. The ETF has a beta of 1.03 and standard deviation of 16.55% for the trailing three-year period. With about 285 holdings, it effectively diversifies company-specific risk .AlternativesiShares ESG Aware MSCI USA ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.iShares ESG Aware MSCI EAFE ETF (ESGD) tracks MSCI EAFE ESG Focus Index and the Vanguard ESG U.S. Stock ETF (ESGV) tracks FTSE US ALL CAP CHOICE INDEX. iShares ESG Aware MSCI EAFE ETF has $10.08 billion in assets, Vanguard ESG U.S. Stock ETF has $11.47 billion. ESGD has an expense ratio of 0.21% and ESGV changes 0.09%.Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap GrowthBottom LineTo learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report iShares ESG Aware MSCI USA ETF (ESGU): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks