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Updated 2mo ago.
Updated 2mo ago.
ESG investing selects investments based on environmental, social, and governance criteria, in addition to traditional financial metrics. ESG ETFs typically exclude companies involved in fossil fuels, weapons, or tobacco.
XESG.TO (iShares ESG Aware MSCI Canada) gives you Canadian market exposure while overweighting companies with better ESG scores. GEQT.TO (iShares ESG All Equity ETF Portfolio) is a global all-in-one ESG ETF. Note: ESG ETFs often have a slightly higher MER — for example, GEQT.TO at 0.24% versus 0.20% for XEQT.TO.
ESG investing lets you align your values with your investments. However, there are trade-offs to know: Canadian ESG ETFs tend to underweight the energy sector (which makes up ~17% of the TSX), which can positively or negatively affect returns depending on market cycles. Do your research to make sure the ESG ETF you choose actually matches your values — criteria vary widely between providers.