iShares ESG Aware MSCI USA Value ETF (EVUS) seeks to track the MSCI KLD 400 Social Index, which measures the performance of U.S. large- and mid-cap value stocks that meet environmental, social, and governance (ESG) criteria while exhibiting value characteristics like low price-to-book and price-to-earnings ratios.
How It Works
EVUS uses a passively managed, market-capitalization-weighted approach that combines traditional value screening with ESG filters. The fund selects stocks from the MSCI USA Index that rank favorably on value metrics including price-to-book, price-to-earnings, and price-to-sales ratios, then applies ESG screens to exclude companies with poor sustainability practices. Holdings are rebalanced quarterly to maintain alignment with index methodology and typically include 200-300 stocks across various sectors.
Key Features
- Combines value investing with ESG screening, targeting undervalued companies that meet sustainability and governance standards
- Launched in 2023 with zero expense ratio during promotional period, making it cost-competitive among ESG value ETFs
- Provides 1.78% dividend yield while maintaining ESG compliance, appealing to income-focused sustainable investors
Risks
- This ETF can lose value if value stocks continue underperforming growth stocks, as seen during 2010-2020 when value lagged significantly
- ESG screening reduces the investment universe and may exclude profitable companies, potentially limiting returns compared to broad value ETFs
- As a newer fund with minimal assets, it faces liquidity risks and potential closure if it fails to attract sufficient investor interest
Who Should Own This
Best suited for ESG-conscious investors with 3-7 year time horizons seeking value exposure within sustainable investing frameworks. Medium risk tolerance required due to value stock volatility and style rotation risks. Works as a satellite holding (10-20% of equity allocation) for investors building diversified ESG portfolios or replacing traditional value ETFs.