The Best ESG ETFs to Invest

The fund's main objective is to replicate the performance of UK-based companies that prioritise environmental, social, and governance (ESG) factors. These companies specifically exclude involvement in nuclear power, tobacco, alcohol, gambling, military weapons, civilian firearms, and genetically modified organisms.

The fund's investment strategy aims to replicate the returns of the MSCI UK IMI Extended SRI Low Carbon Select 5% Issuer Capped Index. When it comes to portfolio diversification, as much as 98.92% of it is UK stock.

The goal of the fund is to mirror the results of the MSCI United Kingdom IMI Low Carbon SRI Leaders Select Index. This index is specifically created to represent companies with lower carbon exposure than the United Kingdom stock market while demonstrating strong environmental, social, and governance (ESG) performance.

As far as portfolio diversification, a whopping 98.84% of it is UK stock.

The fund operates under a passive management strategy, and its primary goal is to mirror the performance of the FTSE All Share ex IT ex CW ex TC ex REITS Dividend Growth with Quality Net Tax Index. The fund deducts the ongoing charges and associated costs from the index's performance to reflect its own returns.

The primary aim of the fund is to replicate the performance of the MSCI UK IMI SRI Filtered PAB Index while minimising any deviation in performance between the sub-fund's net asset value and the Index. The sub-fund, categorised as a financial product under Article 9(3) of the Disclosure Regulation, is designed to reduce carbon emissions by closely imitating the index.

When it comes to portfolio diversification, as much as 95.36% of it is UK stock.

The fund aims to deliver investors a total return that considers both capital appreciation and income earnings, aligning with the performance of the MSCI UK IMI Country ESG Leaders 5% Issuer Capped Index.

As far as portfolio diversification, a whopping 98.84% of it is UK stock.

The fund's primary objective is to replicate the performance of the FTSE UK ESG Low Carbon Emissions Select Index as closely as possible, aiming to minimise any tracking error between the fund's performance and that of the index.

When assessing an ESG ETF, it's essential to consider the underlying holdings' ESG ratings. Specialised ESG research firms provide these ratings and evaluate companies based on their environmental impact, social responsibility, and governance practices. Look for ETFs prioritising holdings with high ESG ratings, indicating a strong commitment to sustainability.

In addition to ESG ratings, it's also essential to go into the specific ESG measures considered by the ETF. These measures can include carbon footprint, diversity and inclusion metrics, energy efficiency, waste management, and other sustainability indicators. A suitable ESG ETF should focus on companies with positive performance in these specific ESG measures.

Expense ratios directly impact an investor's returns. Lower expense ratios indicate a more cost-effective ETF, as they reduce the drag on investment performance. It's important to compare the expense ratios of different ESG ETFs to identify those with competitive pricing and reasonable fees.

While past performance does not guarantee future results, analysing historical returns can provide insights into an ESG ETF's performance. Assessing returns over different time periods allows investors to evaluate the consistency and alignment of an ETF's performance with ESG principles. Consider the risk-adjusted returns and compare them to relevant benchmarks.

Diversification is vital to managing risk in an ETF. The number of holdings in an ESG ETF indicates its diversification level. A well-diversified ETF should have a broad range of holdings across different sectors, ensuring exposure to various companies that align with ESG criteria. A larger number of holdings can help spread risk and reduce concentration in specific companies or industries.

The AUM of an ESG ETF reflects the level of investor interest and confidence. Higher AUM can indicate greater market acceptance and potentially better access to resources for conducting thorough ESG analysis. A larger AUM can also contribute to the liquidity and stability of an ETF, making it easier for investors to buy and sell shares.

The number of shares outstanding is a measure of an ETF's liquidity. Higher outstanding shares generally indicate greater trading liquidity and narrower bid-ask spreads. It signifies the availability of shares for investors to buy or sell on the secondary market. A sufficient number of shares outstanding ensures smoother trading and helps maintain a fair market price.

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	Interactive Investor	7.6	Visitii.co.uk

Interactive Investor is the UK's second-largest investment platform, offering over 40,000 investment options, thousands of which are ETFs. Moreover, platform users can choose between multiple subscription tiers and account types, including trading accounts, stocks and shares ISA, SIPP, etc.

Interactive Investor is a platform more suited to investors with some degree of experience, particularly those with large portfolios. Its unique fixed price structure separates it from the crowd and makes it appealing for deep investment pots.

On the other hand, while inexperienced investors can undoubtedly benefit from the educational resources provided by Interactive Investor, the platform's fee structure may not be as cost-effective for those just starting out.

Consider using Interactive Investor if you are looking for a platform that offers a wide range of investment options and advanced tools for portfolio management. Otherwise, other options may be more suitable.

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	Hargreaves Lansdown	8.3	Visithl.co.uk

An FTSE 100 company, Hargreaves Lansdown is the biggest investment platform in the UK. It's far from the cheapest option but provides a premium service that aims to give its users everything they need to be successful investors at a price.

From extensive ETF research to first-rate trading tools, the platform offers financial advice and ready-made portfolios for investors wanting to take a more laid-back approach.

It has a comprehensive range of investment options, including EFTs and different account types such as GIAs, ISAs, SIPPs, etc. In short, Hargreaves Lansdown has the means necessary to match your investment values and goals at a price of 0.45% of your portfolio, regardless of its size.

Please note that Hargreaves Lansdown has additional charges besides its annual custody fee, which can make the platform more or less expensive depending on how you use it. But overall, considering what you are getting, the platform is undoubtedly worth the extra cost.

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	Saxo Markets	8.8	Visithome.saxo					CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money. Losses can exceed deposits on some products.

Saxo Markets is another excellent option for socially responsible investors. The platform provides its users with over 6,000 ETFs traded on more than 30 exchanges worldwide. It also allows investors to open an ISA free of charge and enjoy tax benefits when trading.

Its dealing fees are very competitive and percentage-based. In most cases, the platform charges 0.1% ETF trading commission but has a minimum set at £3. Even with the minimum, the platform is cost-effective and affordable for investors with portfolios of all sizes.

Regarding educational resources, Saxo Markets does incredibly well and provides users with thorough research and market analysis, including live market updates and expert analysis.

If we have to be nitpicky, the one drawback of investing with Saxo Markets is its £500 minimum funding requirements, which can be overlooked, considering the overall affordability of the platform.