The last couple of months have seen a heavy inflow of environmental and social governance (ESG) ETFs being issued. The ESG ETF providers track an index as usual but will eliminate any stocks which trade in weapons, tobacco, controversial products or violate the UN's principles.

To issue an ESG ETF, it requires a fair portion of analysing and monitoring to determine whether the stock can be included in the fund. Index provider MSCI is now eliminating the need to carry out this task by issuing a range of ESG indexes.

Serving as the basis of investment products, including ETFs, the range containing six ESG indexes hopes to satisfy the growing demand for the latest trend.

The six indexes include:

  • MSCI EMU ESG Screened Index
  • MSCI USA ESG Screened Index
  • MSCI Europe ESG Screened Index
  • MSCI World ESG Screened Index
  • MSCI Japan ESG Screened Index
  • MSCI Emerging Markets IMI ESG Screened Index
Deborah Yang, Global Head of ESG Indexes, said in the announcement: "Making exclusions with a market capitalization approach has been possible for many years and MSCI has done so for over two decades. We have observed a growing interest amongst institutional and wealth investors for market capitalization indexes with ESG exclusions as an off-the-shelf solution, ones that are easy to use and implement."

Index performances - Net returns:

MSCI EMU ESG Screened Index:

1 month 1 year 5 year
MSCI EMU ESG Screened Index -0.46% -1.45% 7.57%
MSCI EMU Index -0.28% -0.53% 7.69%
MSCI USA ESG Screened Index:
1 month 1 year 5 year
MSCI USA ESG Screened Index 0.23% 17.81% 13.51%
MSCI USA Index 0.42% 17.22% 13.09%
MSCI Europe ESG Screened Index:
1 month 1 year 5 year
MSCI Europe ESG Screened Index 0.24% 0.39% 6.75%
MSCI Europe Index 0.53% 1.47% 6.92%
MSCI World ESG Screened Index:
1 month 1 year 5 year
MSCI World ESG Screened Index 0.37% 11.46% 9.55%
MSCI World Index 0.56% 11.24% 9.28%
MSCI Japan ESG Screened Index:
1 month 1 year 5 year
MSCI Japan ESG Screened Index 2.95% 10.25% 7.02%
MSCI Japan Index 3.04% 10.20% 6.76%
MSCI Emerging Markets IMI ESG Screened Index:
1 month 1 year 5 year
MSCI EM IMI ESG Screened Index -1.03% -1.52% 3.65%
MSCI EM IMI Index -0.85% -1.18% 3.51%