Are you interested in investing your hard-earned cash in a way that aligns with your values and makes a positive impact? If yes, then you'll be thrilled to know that we have compiled a list of the top 5 ESG ETFs to invest in Australia for 2023.

Not only do these funds prioritise environmental, social, and governance factors, but they have also had strong financial performance since inception. So, without further ado, let's dive into the details of each fund, including their investment strategies, historical performance, important investment metrics, and more.

Top 5 ESG ETFs to Invest in for 2023.

1. BetaShares Australian Sustainability Leaders ETF (ASX: FAIR) - This ETF invests in Australian companies that demonstrate strong sustainability practices. Its investment strategy is focused on companies that are leaders in ESG practices, and it aims to outperform the S&P/ASX 200 Index. Since its inception in 2017, it has returned 13.35% p.a., with a low expense ratio of 0.49%. The ETF has exposure to a range of sectors, with the highest sector weightings being materials, healthcare, and financials.

2. Vanguard Ethically Conscious International Shares Index ETF (ASX: VESG) - This ETF invests in international companies with high ESG ratings. Its investment strategy is based on the FTSE Developed ex Australia Choice Index, which screens for companies with high ESG ratings. Since its inception in 2018, it has returned 12.81% p.a. with a low expense ratio of 0.18%. The ETF has exposure to a range of sectors, with the highest sector weightings being technology, healthcare, and consumer discretionary.

3. VanEck Vectors MSCI International Sustainable Equity ETF (ASX: ESGI) - This ETF invests in international companies with strong ESG practices. Its investment strategy is based on the MSCI World ex Australia ex Tobacco ex Controversial Weapons ex Nuclear Weapons Index, which screens for companies with strong ESG practices. Since its inception in 2017, it has returned 13.14% p.a. with a low expense ratio of 0.55%. The ETF has exposure to a range of sectors, with the highest sector weightings being technology, healthcare, and consumer discretionary.

4. BetaShares Global Sustainability Leaders ETF (ASX: ETHI) - This ETF invests in global companies that demonstrate strong sustainability practices. Its investment strategy is focused on companies that are leaders in ESG practices, and it aims to outperform the MSCI World ex Australia Index. Since its inception in 2017, it has returned 16.19% p.a. with a low expense ratio of 0.59%. The ETF has exposure to a range of sectors, with the highest sector weightings being technology, healthcare, and consumer discretionary.

5. Australian Ethical Australian Shares ETF (ASX: AETH) - This ETF invests in Australian companies with strong ESG practices. Its investment strategy is focused on companies that are leaders in ESG practices, and it aims to outperform the S&P/ASX 300 Index. Since its inception in 2014, it has returned 12.88% p.a. with a low expense ratio of 0.45%. The ETF has exposure to a range of sectors, with the highest sector weightings being healthcare, financials, and consumer discretionary.

So, there you have it, the top 5 ESG ETFs to invest in Australia for 2023. Each of these funds provides investors with the opportunity to make a positive impact while also potentially earning strong returns. Remember to always do your due diligence before investing and make sure that any investment aligns with your personal financial goals and risk tolerance.

Things to keep of note before investing

It's important to note that these funds have varying levels of exposure to different sectors and industries. As a responsible investor, it's crucial to be aware of what you're investing in and its potential impact. You can find more information about each fund's holdings and exposures on their respective websites.

In addition to their investment strategies and historical performance, it's also important to consider other important investment metrics such as expense ratios, liquidity, and diversification.

What are some of the jargon used in this article?

Expense ratios are the annual fees charged by ETFs and can have a significant impact on your investment returns over time. All the ETFs on our list have low expense ratios, making them an affordable option for investors.

Liquidity refers to how easily an ETF can be bought and sold on the market. The funds on our list are all highly liquid, meaning that they can be bought and sold with ease.

Diversification is an important consideration when investing. By investing in a range of companies across different sectors and industries, you can spread your risk and potentially earn more stable returns. Each of the ETFs on our list provides investors with diversification across different sectors and regions.

The Conclusion

In conclusion, ESG investing is a great way to align your investments with your values and potentially earn strong returns. The top 5 ESG ETFs to invest in Australia for 2023 provide investors with a range of options to choose from, each with their own unique investment strategy, historical performance, and important investment metrics.

Remember, before making any investment decisions, it's important to do your research and consult with a financial advisor to ensure that any investment aligns with your personal financial goals and risk tolerance. Happy investing!