🤝 BFF Take
ESGV Has the Cost and Clarity Edge for Most ESG Investors
ESGV and ESGU track different ESG indexes, charge different fees, and define "ESG" in meaningfully different ways. ESGV costs 0.09% and tracks the FTSE US All Cap Choice Index, which applies a hard exclusion list: no fossil fuels, no tobacco, no weapons, no gambling, no adult entertainment, no nuclear power. You know exactly what is out. ESGU costs 0.15% and tracks the MSCI USA ESG Leaders Index, which tilts the portfolio toward high ESG scorers without making categorical exclusions. ExxonMobil can appear in ESGU if it scores well on ESG factors relative to other oil companies. That is a meaningful difference if you care about what the fund actually excludes. ESGU has more AUM ($17.3B vs ESGV's $13.1B) and launched two years earlier (2016 vs 2018), giving it a longer track record. But at 0.15%, ESGU costs 67% more than ESGV for roughly the same market exposure. The two funds have had a 0.99 correlation with nearly identical returns over five years. For most individual investors who want ESG exposure with transparent exclusions, ESGV is the stronger choice: lower cost, clearer methodology, and a broader ~1,500-stock portfolio vs ESGU's ~320 holdings.
📋 Quick Takeaways
💰ESGV costs 0.09%; ESGU costs 0.15%. Same broad-market ESG exposure, 0.06% cheaper with ESGV ($6/yr per $10K invested).
🚫ESGV's exclusions are categorical: fossil fuels, tobacco, and weapons are out by rule. ESGU uses ESG score optimization. Oil companies can qualify if they score well relative to peers.
📊0.99 five-year correlation. The performance gap between ESGV and ESGU has been under 0.2%/yr annualized across most measured periods.
📊 Data-Based Take: ESGV has the lower fee
Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.
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Reviewed by a CFA® Charterholder · Data updated Jun 2026 · Educational only, not financial advice
ESGV
Vanguard ESG U.S. Stock ETF
ESGU
iShares MSCI USA ESG Optimized ETF
📋 ESGV vs ESGU — Key Facts Side by Side
| Metric |
ESGV |
ESGU |
| Fund Name |
Vanguard ESG U.S. Stock ETF |
iShares MSCI USA ESG Optimized ETF |
| Issuer |
Vanguard |
iShares |
| Tracks Index |
FTSE US All Cap Choice |
MSCI USA ESG Leaders |
| Expense Ratio |
0.09% ✓ |
0.15% |
| Cost per $10K/yr |
$9.00 |
$15.00 |
| AUM |
$13.1B |
$17.3B |
| Holdings |
1,500 |
320 |
| Inception |
2018 |
2016 |
| 1-Year Return |
+12.50% |
+12.80% |
| 3-Year Return |
+8.20% |
+8.40% |
| 5-Year Return |
+11.80% |
+12.00% |
| Avg Bid-Ask Spread |
0.01% |
0.01% |
Data from ETF BFF database. Returns are annualised. Not investment advice.
📊 ESGV vs ESGU — Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Should You Buy ESGV or ESGU?
Choose if...
ESGV
- You want the lowest fees — saves ~$6/yr per $10K vs ESGU
- You want broader diversification (1,500 holdings vs 320)
Choose if...
ESGU
- You already use iShares and prefer staying within their fund family
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❓ ESGV vs ESGU — Frequently Asked Questions
What is the main difference between ESGV and ESGU?
The core difference is how each fund defines "ESG." ESGV (Vanguard ESG U.S. Stock ETF) tracks the FTSE US All Cap Choice Index, which applies a hard exclusion list: fossil fuel companies, tobacco, weapons manufacturers, gambling operators, adult entertainment, and nuclear power are categorically excluded, regardless of how they score on ESG metrics. ESGU (iShares MSCI USA ESG Optimized ETF) tracks the MSCI USA ESG Leaders Index, which tilts the portfolio toward companies with high ESG scores relative to their sector peers. There are no categorical exclusions. An oil company with strong relative ESG performance can be included. If you specifically want to avoid fossil fuels, ESGV's methodology guarantees it. ESGU's does not. See the
impact investing ETF guide for a detailed breakdown of both funds and what they actually hold.
Is ESGV cheaper than ESGU?
Yes. ESGV charges 0.09% per year; ESGU charges 0.15%. That 0.06% difference costs $6 more per year per $10,000 invested with ESGU. Over 30 years on a $100,000 investment at 7% annualized returns, the compounding gap between 0.09% and 0.15% amounts to roughly $20,000 in additional fees paid. Both funds are inexpensive by any standard. But when the two funds have a 0.99 correlation and nearly identical returns, cost becomes the most defensible differentiator. The
expense ratios guide has a calculator to run your specific numbers.
Does ESGU hold fossil fuel companies?
It can, yes. ESGU tracks the MSCI USA ESG Leaders Index, which uses a relative ESG scoring methodology. A fossil fuel company that manages its environmental footprint, governance, and social factors better than its industry peers can qualify for inclusion. ExxonMobil has appeared in S&P 500 ESG indexes for this reason. ESGV, by contrast, explicitly excludes companies with significant business activities in fossil fuels (oil, gas, coal) as a categorical rule. If avoiding fossil fuel exposure is a primary goal, ESGV is the more reliable tool.
Which ESG ETF has better performance: ESGV or ESGU?
Over the five years ending in 2024, ESGU and ESGV returned nearly the same amount annually (within 0.2% of each other), with a 0.99 correlation. Neither has a meaningful performance edge over the other. Any performance differences in shorter periods are driven by their slightly different sector tilts rather than the ESG methodology itself. Because ESGV costs less and the performance is equivalent, ESGV has delivered slightly better net-of-fees results in most measured periods. Past performance does not guarantee future results.
Can you hold both ESGV and ESGU in the same portfolio?
You can, but there is little reason to. The two funds have a 0.99 correlation and cover similar territory. Holding both adds cost without meaningful diversification or additional ESG coverage. The main scenario where you might hold both is if you have an existing ESGU position in a tax-advantaged account and are adding ESGV in a taxable account for the lower expense ratio. Otherwise, pick one: ESGV if you want categorical exclusions and lower cost; ESGU if you specifically need the iShares/BlackRock fund family or have institutional reasons to prefer the MSCI index methodology.
New to ETF investing? See answers to the most common ETF questions →
📄 ESGV & ESGU Fact Sheets
ℹ️ Data shown is for educational purposes and may not reflect the most current figures. Returns are trailing price-based and exclude dividend reinvestment. Past performance does not guarantee future results. ETF BFF is not a licensed financial advisor — this is not personalized financial advice.