IESG is BlackRock’s domestic ESG offering. It offers a broad universe of large, mid & small-cap companies in Australia, screened to avoid companies engaged in serious ESG controversies and select activities based on revenue thresholds; it is certified by the Responsible Investment Association Australasia (RIAA). With a noticeably lower fee than FAIR at around 0.09% p.a., it’s the cost-efficient domestic ESG option. The fund holds 82 stocks at the moment, a similar number to FAIR, but its composition is very different, with the 5 top holdings as follows:
- Commonwealth Bank (ASX: CBA) 13%, Wesfarmers (ASX: WES) +9%, Macquarie Group (ASX: MQG) 8%, Goodman Group (ASX: GMG) %, and CSL Ltd (ASX: CSL) 5%.
Numbers talk, and so far in 2026, the IESG ETF has significantly outperformed the FAIR, only retreating 5%, although it’s a smaller ETF with a market cap of $460mn. The ETF pays a dividend quarterly, but last year it only yielded 2.8%, part franked, less than the FAIR ETF.
For most investors, IESG is likely the stronger option given its lower fees, broader diversification, stronger long-term performance profile and quarterly income distributions. The roughly 0.40% annual fee advantage alone becomes meaningful over time for cost-conscious investors.
However, FAIR makes sense for investors with stricter ESG mandates who specifically want hard exclusions around sectors such as banks, fossil fuels and mining. It is also worth noting that both ESG funds have lagged traditional Australian equity ETFs like VAS and IOZ in 2026, highlighting the performance trade-off that can emerge when excluded sectors—particularly energy and resources—are leading the market.
- We can see the IESG ETF trading higher through 2026 in line with our bullish outlook towards the ASX.
