Ethical ETFs Australia: VESG vs ETHI and VETH vs FAIR

Quick answer: The four biggest ethical ETFs on the ASX take two different approaches. Vanguard's VESG (global, 0.18%) and VETH (Australian, 0.16%) start with the whole market and remove excluded industries, so they stay broad and cheap. BetaShares' ETHI (global, 0.59%) and FAIR (Australian, 0.49%) also exclude industries, then keep only companies they rate as sustainability "leaders", which makes them far more concentrated. Over the past 3 and 5 years, the broader, cheaper Vanguard funds returned more. The BetaShares funds hold different companies, though, including no big four banks or major miners in FAIR, and that is the reason some investors choose them.

The four funds at a glance

	VESG	ETHI	VETH	FAIR
Market	International shares	International shares	Australian shares	Australian shares
Issuer	Vanguard	BetaShares	Vanguard	BetaShares
Management fee	0.18%	0.59%	0.16%	0.49%
Index	FTSE Developed ex Australia Choice	Nasdaq Future Global Sustainability Leaders	FTSE Australia 300 Choice	Nasdaq Future Australian Sustainability Leaders
Holdings	1,422	226	236	50
ETF size	A$1.53b	A$3.88b	A$626m	A$1.02b
Distributions	Quarterly	Half-yearly	Quarterly	Half-yearly
Listed	Sept 2018	Jan 2017	Oct 2020	Nov 2017

Vanguard figures from ETFs at a glance, June quarter 2026. BetaShares figures from each fund page, 15–16 October 2026.

Annual management fee

VETH (Vanguard, Aus)0.16% p.a.

VESG (Vanguard, global)0.18% p.a.

FAIR (BetaShares, Aus)0.49% p.a.

ETHI (BetaShares, global)0.59% p.a.

On $20,000, the fee gap is $82 a year between VESG and ETHI, and $66 between VETH and FAIR.

Two approaches: "exclude" vs "exclude, then pick leaders"

Vanguard (VESG, VETH): broad market minus exclusions. The indexes remove companies with specified involvement in fossil fuels, nuclear power, alcohol, tobacco, cannabis, gambling, adult entertainment or weapons, plus companies that breach UN Global Compact principles. Everything else stays in, weighted by size. That's why VESG still holds 1,422 companies with NVIDIA (6.3%) and Apple (5.7%) at the top, and why VETH's largest holding is Commonwealth Bank at 12.0%. BHP and Rio Tinto, both in the top 10 of Vanguard's ordinary ASX 300 fund VAS, aren't in VETH's top 10, which is led by Commonwealth Bank, Wesfarmers and the other big banks.

BetaShares (ETHI, FAIR): exclusions plus a "leaders" filter. ETHI first identifies "Climate Leaders", then applies ESG screens that exclude companies with direct or significant fossil-fuel exposure, among others. FAIR excludes fossil-fuel exposure and then prefers "Sustainability Leaders" whose activities align with the UN Sustainable Development Goals. The result is a much narrower portfolio. FAIR holds 50 companies, excludes the big four banks and the major miners, and has CSL, Computershare, Suncorp, Telstra and Brambles at the top at around 4–4.5% each.

In practice, VETH looks like the Australian market without its fossil-fuel and other excluded companies: banks included, and heavy in large companies. FAIR looks quite different from the market: no big banks or miners, and much more evenly weighted.

Returns

	1 year	3 years (p.a.)	5 years (p.a.)	As at
VESG	12.08%	17.07%	11.31%	31 Aug 2026
ETHI	6.17%	14.29%	9.66%	30 Sept 2026
VETH	−2.30%	10.27%	6.01%	31 Aug 2026
FAIR	−12.69%	4.60%	1.21%	30 Sept 2026

Returns after fees, with distributions reinvested. Vanguard and BetaShares publish on different dates, so the 1-year figures aren't directly comparable; the 3- and 5-year gaps are too large to be explained by one month. Past returns don't predict future returns.

Two things drive the gaps:

Concentration cuts both ways. FAIR's exclusion of the banks and miners, and its preference for mid-sized companies, has hurt it over five years. In a period when those excluded sectors fall, the same design would help it.
Fees compound. ETHI and FAIR charge roughly three times as much as their Vanguard equivalents, and that's a fixed drag every year.

Use the ETF Calculator to see what a 0.3–0.4% a year fee gap does over 20 years.

Which to choose

VESG for global shares if you want ethical exclusions with the lowest change from a normal global index, at a low fee.
ETHI if you specifically want to hold only companies rated as climate leaders, and you accept a higher fee and a narrower portfolio.
VETH for Australian shares if you want the Australian market without fossil fuels and other excluded industries, while keeping the banks.
FAIR if you want to avoid the big banks and miners altogether and back companies selected for sustainability leadership, knowing it can perform very differently from the market.

Many investors combine one Australian and one international fund, the same way as a standard two-ETF portfolio. If you'd like your super invested the same way, see ethical super funds compared.

Tax

All four are Australian-domiciled. VETH and FAIR distributions can carry franking credits from Australian companies; VESG and ETHI mostly pay unfranked income, with some foreign income tax offsets. Gains on sale use the 50% CGT discount for gains up to 30 June 2027 (units held over 12 months), then inflation indexation with a 30% minimum rate under the 2027 CGT changes. Use the Capital Gains Tax Calculator to estimate a sale.

Frequently asked questions

What is the difference between VESG and ETHI?

VESG (Vanguard, 0.18% p.a.) holds about 1,400 global companies after excluding fossil fuels, weapons, tobacco, gambling and similar industries. ETHI (BetaShares, 0.59% p.a.) excludes similar industries, then keeps only around 230 companies rated as climate leaders. VESG has returned more over 3 and 5 years to 2026; ETHI is more selective.

What is the difference between VETH and FAIR?

VETH (Vanguard, 0.16% p.a.) is the ASX 300 minus excluded industries, so it still holds the big banks; Commonwealth Bank is its largest holding. FAIR (BetaShares, 0.49% p.a.) holds 50 companies selected as sustainability leaders and excludes the big four banks and major miners. FAIR has returned much less than VETH over 3 and 5 years.

What is the cheapest ethical ETF in Australia?

Of the four largest, Vanguard VETH at 0.16% p.a. for Australian shares and VESG at 0.18% p.a. for international shares.

Does VETH hold BHP?

BHP isn't in VETH's top 10 holdings, though it's the largest holding in Vanguard's ordinary Australian shares ETF, VAS. VETH's top 10 is led by Commonwealth Bank, Wesfarmers and the other big banks. VETH's index excludes companies with specified involvement in fossil fuels. Check Vanguard's current holdings list for the full detail.

Are ethical ETFs worse performers?

Not necessarily. To 31 August 2026, VESG returned 17.07% a year over three years against 16.25% for Vanguard's ordinary global fund VGS, and 11.31% against 11.76% over five years: close either way. The bigger differences come from how concentrated a fund is and what it leaves out. FAIR, which excludes the banks and miners, has lagged well behind over five years.

Related calculators and guides

This article is for general information only and does not constitute financial, tax or legal advice. Individual circumstances vary. Consult a registered tax agent or licensed financial adviser before making decisions based on this information.