Top ESG ETFs to Watch in June 2025 for Performance and Affordability

Environmental, social, and governance (ESG) investing remains trendy among more investors in 2025 due to increasing demand for making investments in alignment with sustainability ethics and values. ESG exchange-traded funds (ETFs), investing in companies that receive high-quality ratings on ESG metrics, have become an easy and popular tool for sustainable investing. These finances provide not only entry to good ethics but also the promise of good financial rewards with lower risks thanks to diversification.

An ESG ETF functions by investing in companies that qualify under set ESG criteria, e.g., minimal environmental footprint, robust governance structures, and positive social policies. ETFs are distinct from mutual funds in that they are traded on exchanges throughout the day, offering investors convenience and flexibility of access to investment with sustainability orientation.

Through June 2025, the ESG ETFs have been doing better than anticipated with some experiencing notable returns. At the forefront is the Stance Sustainable Beta ETF (CHGX) with a one-year return of 74.11%. This is then followed closely by the Franklin Responsibly Sourced Gold ETF (FGDL) with a one-year return of 43.64%. The Rayliant Quantitative Developed Market Equity ETF (RAYD) also experienced notable returns with a one-year return of 20.02%.

There are a few additional ETFs that appear in the list of best performing funds that come with Nuveen Winslow Large-Cap Growth ESG ETF (NWLG) at a return of 18.83%, iShares ESG Aware MSCI USA Growth ETF (EGUS) at 16.52%, Dimensional International Sustainability Core 1 ETF (DFSI) at 16.46%, and Avantis Responsible International Equity ETF (AVSD) at 15.18%. These demonstrate how sustainable investing can combine responsible investment with strong market performance.

For cost-conscious investors, the ESG ETF space has low-cost options that preserve ESG values. Low-cost options are typically passively managed and follow ESG indexes to reduce costs. Among the cheapest are iShares ESG Aware MSCI USA ETF (ESGU) and Vanguard ESG U.S. Stock ETF (ESGV), which both have low expense ratios with diversified exposure to ESG-matched stocks.

Some other budget-friendly choices include the SPDR S&P 500 ESG ETF (EFIV), Xtrackers MSCI USA ESG Leaders Equity ETF (USSG), iShares Global Clean Energy ETF (ICLN), Nuveen ESG Large-Cap ETF (NULC), and Fidelity U.S. Sustainability Index Fund (FITLX). These funds allow investors to add ESG to their approach without sacrificing substantial investment fees.

ESG investing is not merely a matter of ethical objectives. It also shapes the behavior of companies and favors those industries with favorable social or environmental impacts. For instance, current market trends indicate that sustainable funds have the ability to match or surpass conventional investments. Research indicates that a $100 investment in an ESG fund in 2018 would be worth $136 by 2024, while a conventional fund would reach $131 in the same timeframe.

The appropriate ESG ETF is a function of numerous variables. Investors need to decide whether or not to employ actively or passively managed funds. Active funds attempt to beat the market but tend to cost more. Passive funds follow ESG indexes and tend to be less costly. Investors also need to locate funds that they deem acceptable, whatever their values happen to be - green power, gender equity, or fair labor practices.

Making sure that ESG investments contribute to the overall portfolio matters. Balance and diversification must be attained to prevent over-concentration in particular industries. Investors must also ensure if money offers ESG impact reports, providing a peek into how one's investment is translating into sustainability outcomes.

As availability and choice grow, ESG ETFs offer investors a convenient means to invest responsibly without sacrificing performance. Whether it is high-generating or low-cost alternatives, there exists a choice to suit different types of investors and goals. This increasing market is indicative of a changing investor attitude towards sustainable growth underpinned by open, rule-based financial instruments.

The growth in ESG ETFs also points to yet more profound shifts in capital markets, where investment products are becoming more and more evaluated on non-financial metrics like carbon intensity, supply chain resilience, and board diversity. The more standardized reporting of ESG and settled regulatory frameworks further solidify the position of such funds as a part of global investing.

With that many doors ajar and increasingly more performance data supporting their financial integrity, ESG ETFs are quite literally one of the biggest investment planning fads of the past few years. For profit-and-purpose-seeking investors, ESG ETFs are a utilitarian and efficient answer.

Source & Credits:
2025 Nerdwallet – Original article adapted from KnowESG.