ESG exchange-traded funds (ETFs) have faced significant investor pullback in the first 100 days of the Trump administration, with the 10 largest ESG ETFs seeing net outflows totalling $623.9 million over the past three months.
The largest of these, the $12.5 billion iShares ESG Aware MSCI USA ETF (ESGU), managed by BlackRock, recorded outflows of $420.1 million, according to data from ETF.com. The fund declined 8.7% in the same period, underperforming BlackRock’s broader iShares Core S&P 500 ETF (IVV), which fell 7.9%.
The slump coincides with President Trump’s return to office and the administration’s swift rollback of funding for programmes supporting diversity, environmental protection, and social causes. These policy reversals—alongside renewed backing for fossil fuel development—have dampened sentiment around ESG investments, once championed by progressive investors and institutions.
Kent Thune, senior research analyst at ETF.com, said: “The Trump administration’s public disdain for the diversity, equity and inclusion (DEI) movement certainly hasn’t helped the ESG investing theme. While I don’t think socially responsible investing is dead, I don’t see it returning to its peak either.”
ESG investing, which surged in popularity during the previous administration and amid global climate pledges, has faced increasing political opposition since 2022. Republican-led states including Texas, Florida, West Virginia, Kentucky and Oklahoma have enacted measures to restrict or ban the use of government pension funds for ESG investments, accelerating the trend of outflows.
Seven of the top 10 ESG ETFs are issued by BlackRock, whose CEO Larry Fink has recently sought to tone down public messaging around ESG in light of sustained political pressure. Despite minor inflows into a few funds—such as the $64.6 million added to the $9.5 billion Vanguard ESG U.S. Stock ETF (ESGV)—they have been eclipsed by significant redemptions from others.
Notably, the iShares MSCI USA ESG Select ETF (SUSA) and the iShares MSCI KLD 400 Social ETF (DSI) recorded outflows of $234.3 million and $185.3 million, respectively.
While ESG funds still hold billions in assets, the current political climate and shifting investor sentiment suggest the sector may struggle to regain its former momentum under the Trump administration.
