- Ethical ETF trends and average returns
- What are the best performing ethical ETFs?
- What are the worst performing ethical ETFs?
- What are the Ethical ETFs with the largest inflows/outflows?
- New ETFs
- Ethical ETFs Performance Table
In this blog article we analyse the performance of Ethical ETFs in Australia (using data from ASX as at 31 December 2025) to help you find the best and worst performing ethical ETFs.
If you’re not sure what ethical investing is, we explore that in more detail in this handy blog.
Investors with Stockspot who wish to invest in companies that have been screened for environmental, social and governance (ESG) factors, have the option of sustainable portfolio recommendations.
Ethical ETF trends and average returns
How did ethical ETFs perform in 2025?
Ethical ETFs finished 2025 with more subdued momentum compared with the strong rebound seen earlier in the year. After sharp improvements in returns through the first half of 2025, the December quarter showed moderation across many Australian and global ESG funds.
At the end of Q4 2025, the average 1-year return for Australian share ethical ETFs eased to 8.2%. While still positive, this was materially lower than the double-digit results investors saw mid-year as markets cooled and earlier gains normalised.
Global share ethical ETFs told a slightly stronger story, delivering an average 1-year return of 11.6%. However, performance dispersion widened significantly. Broad market ESG leaders remained solidly positive, while thematic climate and impact strategies produced both some of the best and worst outcomes.
Investor demand for sustainable investing continued to build through the December quarter. Across the ETFs tracked, 14 of 19 funds recorded an increase in funds under management (FUM) between the end of Q3 and Q4.
Notable moves included:
- Continued strength in large, diversified global exposures such as ETHI, VESG and IWLD, all of which added meaningful assets.
- A significant jump in FUM for E200, which more than doubled over the quarter as investors sought low-cost Australian equity exposure with ESG considerations.
- More mixed outcomes among smaller thematic funds, with ERTH and DGGF among those to record slight declines.
What are the best performing ethical ETFs of 2025?
Performance leadership shifted in the final quarter of the year, with a wider gap opening between diversified ESG funds and higher-beta thematic strategies.
Across both Australian and global markets, the VanEck Global Clean Energy ETF (ASX: CLNE) delivered the strongest 1-year return, surging 42.6% to the end of Q4 2025. The rebound highlights how quickly sentiment can turn for climate and clean-energy exposures after several softer years.
Among the large, diversified global ESG funds, BetaShares Vanguard MSCI International Sustainable ETF (ASX: VESG) and iShares Core MSCI World ex Australia ESG Leaders ETF (ASX: IWLD) remained near the top of the table, returning 12.4% and 12.2% respectively over the year.
Looking at Australian share ethical ETFs, Intelligent Investor Ethical Shares (ASX: INES) led the group with a 13.0% 12-month return, closely followed by VETH and RARI.
What was the best ethical ETF over the past 3 years
Over the medium term, broad global exposures continued to dominate. IWLD held its position as the standout performer, generating 23.4% per annum over three years to December 2025. That result leaves it marginally ahead of VESG, which delivered 23.1% p.a. across the same timeframe.
The consistency of these diversified, low-cost ESG benchmarks has been a defining theme of ethical ETF performance in recent years, particularly compared with the more volatile path of sector-specific funds.
What are the worst performing ethical ETFs of 2025?
After the strong rally in early 2025, several ethical ETFs gave back performance during the December quarter, leading to a new group of short-term laggards.
Over the 12 months to the end of Q4 2025, the weakest return among the ETFs tracked came from the BetaShares Australian Sustainability Leaders ETF (ASX: FAIR), which delivered just 0.3%. The result marks a significant slowdown compared with the stronger conditions seen earlier in the year.
Close behind was the eInvest Future Impact Small Caps Fund (ASX: IMPQ), returning 0.9% over the same period. Small-cap and impact-oriented strategies tended to face greater headwinds as investors favoured larger, more liquid companies late in the year.
Other diversified funds, while still well ahead of FAIR and IMPQ, also cooled materially compared with their mid-2025 highs.
What was the worst ethical ETF over the past 3 years
Despite its dramatic improvement in the past year, the VanEck Global Clean Energy ETF (ASX: CLNE) continued to rank as the weakest fund over a three-year period, with returns of -2.68% p.a.
This underlines the higher volatility that can come with thematic exposures. Periods of sharp rallies can be followed by extended drawdowns, leaving longer-term averages well below those of broad ESG benchmark strategies.
CLNE was the worst performing ETF of those compared over the past 3 years but the best performing over the 12 months to 31 December 2025.
What ethical ETF grew the most in 2025?
Despite mixed returns, investor demand for sustainable investments remained firm into the end of the year, with most ethical ETFs attracting additional capital during the December quarter.
The standout winner was SPDR S&P/ASX 200 ESG ETF (ASX: E200), which recorded the largest uplift in FUM. Assets climbed from $101.9 million to $255.5 million, an increase of more than $150 million in just one quarter.
Other notable inflows included:
- iShares Core MSCI World ex Australia ESG Leaders ETF (ASX: IWLD) – up roughly $135 million
- BetaShares Vanguard MSCI International Sustainable ETF (ASX: VESG) – up about $79 million
- iShares Core MSCI World ex Australia ESG Leaders (AUD Hedged) ETF (ASX: IHWL) – up more than $84 million
What is the largest ethical ETF in 2025?
By the end of 2025, the title of largest ethical ETF in Australia remained unchanged, although asset levels shifted during the year.
The biggest Australian shares ethical ETF of 2025 was the BetaShares Australian Sustainability Leaders ETF (ASX: FAIR), managing approximately $1.2 billion as at 31 December 2025, remaining the dominant domestic ESG option despite experiencing a modest pullback in funds during the final quarter of 2025.
In global equities, the scale difference is far more pronounced. The BetaShares Global Sustainability Leaders ETF (ASX: ETHI) continued to tower over the market with around $3.82 billion in assets under management, making ETHI more than three times the size of FAIR.
What new ethical ETFs are available for Australian Investors?
Over the last four years we have seen three new ethical ETFs come to market from iShares plus one BetaShares Ethical Australian Composite Bond ETF (AEBD):
- iShares Core MSCI Australia ESG Leaders ETF (IESG) – launched on 2 June 2021
- iShares Core MSCI World ex Australia ESG Leaders ETF (IWLD) and iShares Core MSCI World ex Australia ESG Leaders (AUD Hedged) ETF (IHWL) – both these funds were originally launched on 22 April 2016 but changed to ethical strategies on 8 June 2021.
- BetaShares Ethical Australian Composite Bond ETF (AEBD) – launched 4 November 2024.
Does Vanguard have an ethical ETF?
Vanguard has an Australian share ethical ETF, Vanguard Ethically Conscious Australian Shares ETF (ASX: VETH) and an ethical global share product Vanguard Ethically Conscious International Shares Index ETF (ASX: VESG). We compare their performance to BetaShares, iShares, VanEck, and other product issuers below.
How did Australia share ethical ETFs perform in 2025?
| CODE | FUND NAME | FEE (MER) | FUM March ’25 ($M) | FUM CHANGE ($M) | 1 YR RETURN | 3 YR RETURN (P.A) |
| FAIR | BetaShares Australian Sustainability Leaders ETF | 0.49% | $1,224.0 | ($58.4) | 0.3% | 10.0% |
| RARI | Russell Australian Responsible Investment ETF | 0.45% | $461.0 | $1.3 | 12.0% | 13.6% |
| VETH | Vanguard Ethically Conscious Australian Shares ETF | 0.16% | $634.9 | $22.2 | 12.6% | 14.1% |
| GRNV | VanEck Vectors MSCI Australian Sustainable Equity ETF | 0.35% | $271.0 | $23.4 | 8.8% | 13.2% |
| E200 | SPDR S&P/ASX 200 ESG Fund | 0.05% | $255.5 | $153.6 | 10.3% | 12.0% |
| INES | InvestSMART Ethical Share Fund (Managed Fund) | 0.97% | $76.7 | ($1.4) | 13.0% | 11.1% |
| IMPQ | eInvest Future Impact Small Caps Fund (Managed Fund) | 0.99% | $38.8 | ($6.7) | 0.9% | 3.4% |
| IESG | iShares Core MSCI Australia ESG Leaders ETF | 0.09% | $426.3 | $0.3 | 7.5% | 12.8% |
| Avg | 0.44% | 8.2% | 11.3% | |||
| Total | $3,388.2 | $164.3 |
How did global share ethical ETFs perform in 2025?
| CODE | FUND NAME | FEE (MER) | FUM Jun’21 ($M) | FUM CHANGE ($M) | 1 YR RETURN | 3 YR RETURN (P.A) |
| HETH | BetaShares Global Sustainability Leaders ETF – Currency Hedged | 0.62% | $704.2 | $46.6 | 10.7% | 16.7% |
| ESGI | Vaneck MSCI International Sustainable Equity ETF | 0.55% | $238.4 | $4.7 | 6.3% | 15.2% |
| ETHI | BetaShares Global Sustainability Leaders ETF | 0.59% | $3,819.2 | $83.8 | 4.8% | 18.1% |
| VESG | Vanguard Ethically Conscious International Shares Index ETF | 0.18% | $1,383.2 | $79.1 | 12.4% | 23.1% |
| IWLD | iShares Core MSCI World ex Australia ESG Leaders ETF | 0.09% | $1,523.9 | $134.8 | 12.2% | 23.4% |
| IHWL | iShares Core MSCI World ex Australia ESG Leaders (AUD Hedged) ETF | 0.12% | $924.0 | $84.2 | 17.8% | 21.8% |
| CLNE | VanEck Global Clean Energy ETF | 0.65% | $70.1 | $4.9 | 42.6% | -2.7% |
| ERTH | BetaShares Climate Change Innovation ETF | 0.65% | $80.9 | ($1.8) | 9.8% | 1.9% |
| DBBF | BetaShares Ethical Diversified Balanced ETF | 0.39% | $37.9 | $0.7 | 3.1% | 9.6% |
| DZZF | BetaShares Ethical High Growth ETF | 0.39% | $112.0 | $1.4 | 4.1% | 13.9% |
| DGGF | BetaShares Ethical Diversified Growth ETF | 0.39% | $54.7 | ($0.1) | 3.9% | 11.9% |
| Avg | 0.42% | 11.6% | 13.9% | |||
| Total | $8,948.5 | $438.3 |
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