This ETF passively tracks the S&P 500 Fossil Fuel Free Index. It removes companies that hold fossil fuel reserves from the S&P 500 and holds the remaining stocks on a market-cap-weighted basis.

It suits long-term investors who value ESG principles but still want to capture the performance of the broader US large-cap market.

State Street (SSGA) launched the ETF in 2015, and it is managed passively (index tracking).

From the S&P 500 constituents, the fund screens out companies that hold fossil fuel reserves such as oil, natural gas, and coal, then holds the remaining stocks in proportion to their market capitalization. Because energy companies are excluded, the weights of the information technology, health care, and consumer sectors are slightly higher than in the standard S&P 500.

• An ESG screening structure that systematically excludes companies holding fossil fuel reserves
• Broad diversification maintained through its S&P 500 large-cap foundation

Assets under management (AUM) stand at $2.8B, and the total expense ratio is 0.20% per year.

Its AUM is larger than that of the comparison ETFs in the table, SNPE and SPUS, while its fee is somewhat higher than that of standard S&P 500 core ETFs.

Thanks to its heavy weighting in technology and health care stocks, it tends to move similarly to the standard S&P 500 in growth-driven markets. However, because the energy sector is excluded, its relative performance may diverge during periods of strong oil prices.

Long-term interest in the ESG theme remains steady, while fund flows are affected by shifts in climate investment policy. Its large-cap-focused structure keeps volatility relatively low.

Its strengths are the exclusion of climate risk and broad large-cap diversification, while its weaknesses are the tracking error caused by excluding the energy sector and its fee.

The comparison ETFs shown in the table include SNPE, which takes the same ESG screening approach (based on Nasdaq ESG criteria), and SPUS, which excludes fossil fuels under Islamic ethical standards. RWL, which is based on a dividend growth strategy, is also included as a comparison. Other alternatives with a similar approach to excluding fossil fuels include ESGU, which applies broad ESG screening, ETHO, which uses climate-based screening, and JUST, which also incorporates social responsibility criteria. When compared with standard S&P 500 core ETFs, the difference in energy sector weighting is the key distinction, and given the fee gap, it is reasonable to choose based on whether you want to reflect ESG values in your portfolio.

Here are the points to review before investing in SPYX. The ESG principle of excluding fossil fuels is clear, but it is wise to check in advance, against your own investment goals, the cost level, the performance gap caused by excluding the energy sector, and the impact of exchange rates.

Because the energy sector is excluded, relative performance may lag the standard S&P 500 when oil prices rise. Investors should also weigh the possibility of changes to the ESG screening criteria and the fee burden over the long term.

It is a suitable choice for investors who are sensitive to climate risk and want diversified exposure to US large caps. If cost is your priority, consider a standard S&P 500 core ETF; if ESG values come first, it is worth comparing SPYX with similar products such as ESGU and ETHO.