ESML ETF: What Is It? A Complete Guide to Returns, Fees, Holdings and Alternative ETFs
A passive US small-cap ETF from BlackRock's iShares that applies an ESG filter. Key features are broad diversification across more than 900 holdings and a low expense ratio.
SubscribeWhat Is This ETF?
The fund tracks the MSCI USA Small Cap Extended ESG Focus Index. It follows a score-based index strategy that preserves the performance profile of the US small-cap market while assigning relatively higher weights to companies with strong ESG characteristics.
It suits long-term investors who want small-cap growth potential while making ESG criteria part of their investment principles.
Launched by BlackRock (iShares) in 2018, it is a passively managed ETF that tracks an index.
How Does It Invest?
| Item | Details |
|---|---|
| Tracked Index | MSCI USA Small Cap Extended ESG Focus Index |
| Management Style | Passive (index tracking) |
| Rebalancing Frequency | Quarterly |
| Dividend Frequency | Quarterly |
| Total Expense Ratio | 0.17% |
The fund tracks an index built on the MSCI USA small-cap index, with ESG scores reflected in the weightings. Rather than simply excluding companies, it adjusts weights based on scores, which keeps return characteristics similar to the parent index while increasing ESG exposure.
- Broad small-cap diversification across more than 900 holdings
- Maintains small-cap market exposure while applying an ESG filter
Size and Costs
Assets under management (AUM) stand at $2.8B, and the Expense Ratio is 0.17% per year.
The fee burden is low compared with similar ETFs in the same category, and the fee gap versus pure small-cap index ETFs such as IWM is not large. If you have no ESG preference, you can consider a pure small-cap ETF with an even lower fee as an alternative.
Performance and Trends
1-Year Price Performance
Dividend & Yield
52-Week Price RangeUS small caps tend to react more sensitively to the interest rate environment and the economic cycle than large caps. They generally perform relatively well when rate pressure eases, and the impact of ESG characteristics on long-term performance may vary depending on the market phase.
With institutional and retail demand for ESG investing remaining steady, fund inflows tend to arrive when small-cap valuation appeal comes into focus. Assets under management remain at a reasonable level, so liquidity risk is limited.
Pros and Cons
Its strengths are a low fee and broad diversification, while its weaknesses are the volatility typical of small caps and the tracking error that comes with the ESG filter.
💪 Key Strengths
⚠️ Points to Watch
Alternative ETFs and Related Products
ESGU, ESGV, DSI and SUSA shown in the table are comparable ETFs that apply ESG filters to US stocks, but they mainly target large caps or the total market capitalization, so their small-cap weighting is low or nonexistent. For an ESG ETF concentrated in small caps like ESML, direct substitutes are limited. If you want small caps without ESG, IWM (Russell 2000) or VB (Vanguard Small-Cap) are lower-fee alternatives, and to focus on small-cap value stocks you can consider IJS, or IWO for a growth tilt.
Peer Comparison ETFs| Ticker | Name | Price | Change | AUM | Total Expense Ratio | Dividend Yield | 1Y |
|---|---|---|---|---|---|---|---|
 ESGU | iShares Trust iShares ESG Aware MSCI USA ETF | $165.22 | -1.9% | $18.2B | 0.15% | 0.94% | +10.9% |
 ESGV | Vanguard ESG U.S. Stock ETF | $132.73 | -2.1% | $13.3B | 0.09% | 0.9% | +9.8% |
 DSI | iShares ESG MSCI KLD 400 ETF | $142.93 | -2.1% | $5.5B | 0.25% | 0.89% | +10.2% |
 SUSA | iShares ESG Optimized MSCI USA ETF | $155.03 | -1.9% | $4.1B | 0.25% | 0.84% | +11.5% |
 USCA | Xtrackers MSCI USA Climate Action Equity ETF | $44.81 | -1.8% | $3.5B | 0.07% | 1.06% | +6.8% |
Top Holdings| Ticker | Name | Weight | Price | Change | Market Cap | P/E | Dividend Yield |
|---|---|---|---|---|---|---|---|
| SNDK | Sandisk Corp | 0.08% | $1150.89 | -13.5% | $166.3B | 15.8 | - |
| LITE | Lumentum Holdings Inc | 0.01% | $840.70 | -8.6% | $76.2B | - | - |
 SUNC | SunocoCorp LLC | 0.01% | $71.21 | -1.6% | $3.7B | - | 5.67% |
| MRNA | Moderna Inc | 0.01% | $221.72 | -0.5% | $88.5B | - | - |
| COHR | Coherent Corp | 0.01% | $210.32 | -11.3% | $41.4B | 51.1 | 0.01% |
| FTI | TechnipFMC plc | 0.01% | $68.77 | +2.7% | $27.0B | 21.7 | 0.37% |
 USFD | US Foods Holding Corp | 0.01% | $103.61 | +0.8% | $22.4B | 31.9 | - |
 CASY | Casey's General Stores Inc | 0.01% | $680.19 | +0.4% | $25.1B | 32.8 | 0.38% |
Investor Checkpoints
Here are the key points to review before investing in ESML. It is important to thoroughly check in advance the volatility typical of small caps, how the ESG filter is applied, and the cost structure.
| Checkpoint | What to Check | Current Status |
|---|---|---|
| 💵 Expense Ratio | Confirm whether cumulative costs are reasonable for long-term holding | Remains at a low level |
| 💧 Liquidity | Check daily trading value and bid-ask spread | Lower than large-cap ETFs |
| 📊 ESG Criteria | Check the ESG rating method used and excluded industries | MSCI ESG criteria applied |
| 📉 Small-Cap Volatility | Check whether you can tolerate drawdowns during sharp market declines | Higher than large caps |
The combination of small-cap concentration and an ESG filter can produce tracking error relative to the market. During recessions or sharp rate increases, the fund is exposed to the wide price swings typical of small caps, so a long-term holding perspective and inclusion within a sufficiently diversified portfolio are recommended.
It is a suitable choice for investors who want to participate in US small-cap growth while keeping to ESG principles. If pure small-cap exposure is the goal, consider the lower-fee IWM or VB, and if you want the small-cap factor without ESG, it is worth comparing other alternatives as well.
SubscribeDisclaimer: This content is for informational purposes only and does not constitute investment advice. All investment responsibility lies with the investor.
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