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This Week’s Bonus Story
3 ETFs Combining Market-Beating Performance and ESG Goals
Submitted by Nathan Reiff. First Published: 1/22/2026.
Key Points
- ESG is increasingly important as a criterion for selecting investment targets, with a growing number of ETFs dedicated to ESG-focused names.
- Three ETFs with an ESG approach stand out in 2026 not only for their strategies but also for their performance: each has surpassed the S&P 500 over the last year, with total returns of around 29% or more.
- Both EASG and NUDM target ESG companies from developed markets outside the United States, while CHPS has a narrower focus on semiconductor stocks.
No longer reserved for niche strategies, Environmental, Social, and Governance (ESG) principles are becoming a major consideration for investors as climate change, geopolitics, and energy usage take on greater importance across industries. PricewaterhouseCoopers has predicted that ESG will remain a dominant theme in exchange-traded fund (ETF) launches. ESG ETFs let investors emphasize companies prioritizing sustainability and other ESG objectives without having to evaluate each firm’s compliance individually.
ESG matters to many investors, but an ESG allocation is only compelling if it can also deliver strong returns. Fortunately, several ESG-focused ETFs have been outperforming the market and look positioned to continue doing so.
Non-U.S. Focus Provides Diversification, But Liquidity May Be an Issue for EASG
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The Xtrackers MSCI EAFE Selection Equity ETF (NYSEARCA: EASG) screens for ESG-focused companies in developed markets outside North America. EASG tracks the MSCI EAFE Selection Index—an index of mid- and large-cap companies that meet ESG criteria—and further narrows the universe to firms in the top 50% by market cap within that index.
The result is a portfolio of roughly 350 names that tilts toward financials, industrials, and information technology.
Japanese companies represent about a quarter of the holdings, followed by the United Kingdom, France, and other markets across Europe and Asia. As a result, EASG’s basket is more geographically diversified than some other ESG ETFs.
However, its assets under management (AUM) are relatively low at about $65 million, and its one-month average trading volume is roughly 4,100—figures that may raise liquidity concerns for more active traders.
Investors may still favor EASG if it maintains recent momentum. The fund returned 28.5% over the past year, offers a compelling dividend yield of 4.11%, and carries a modest expense ratio of 0.14%.
Similar Approach to EASG, But Better Liquidity and Returns Alongside Higher Fees
Using a strategy similar to EASG’s, the Nuveen ESG International Developed Markets Equity ETF (BATS: NUDM) also targets ESG stocks from developed markets outside the United States and Canada.
For a higher fee of 0.28%, NUDM offers a more concentrated portfolio of 157 stocks drawn from countries such as the United Kingdom, Switzerland, Germany, and France.
Financials and industrials make up the largest portions of the portfolio, followed by healthcare and information technology.
Given the overlap between EASG and NUDM, investors would likely choose one or the other rather than hold both.
Although NUDM is costlier, it has posted stronger recent performance, returning 32.3% over the past year.
Though lower than EASG’s, NUDM’s dividend yield of 2.72% is still healthy. Another advantage NUDM holds over EASG is liquidity: the fund has about $636 million in AUM and a one-month average trading volume near 103,000. Those figures give NUDM an edge over EASG, even if they remain modest compared with some large non-ESG funds.
Competitive Semiconductor ETF With Strong Returns
For a different angle within ESG, consider the Xtrackers Semiconductor Select Equity ETF (NASDAQ: CHPS). CHPS focuses on semiconductor companies that meet sustainability criteria, producing a relatively small portfolio of just over 50 positions. Nearly two-thirds of the holdings are U.S. companies, with Asian firms making up roughly a quarter.
The fund includes many of the industry’s largest names, such as NVIDIA Corp. (NASDAQ: NVDA), SK hynix Inc., and ASML Holding N.V. (NASDAQ: ASML).
This makes CHPS a solid semiconductor ETF with the added benefit of ESG screening. Its expense ratio of 0.15% is also competitive for the category.
CHPS has returned more than 14% year-to-date in 2026 and an impressive 71.7% over the past 12 months.
The trade-off is liquidity: CHPS has AUM under $24 million and a one-month average trading volume around 15,000, which could concern investors seeking highly liquid positions.
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