Australian investors chase returns over ethics

Douglas Morris, CEO at Sharesight

New data from Sharesight shows ethical investing has fallen sharply among Australian self-directed investors since 2021, and the numbers tell a clear story about where retail money is going instead.

ESG-labelled funds dropped 60–70% within Sharesight’s top 250 most-traded instruments between December 2021 and December 2025.
Average ESG risk score rose from 21.2 to 24.8, with the implied MSCI ESG rating falling a full letter grade from A/AA to BBB/A.
Strong rotation into US technology, cryptocurrency, uranium and defence sectors.
No dedicated ESG or ethical fund appears among the top-traded holdings of any Australian investor cohort in the 12 months to April 2026.

Analysis of Sharesight’s most-traded holdings reveals that dedicated ESG funds declined by 60–70% in the platform’s top 250 investments between December 2021 and December 2025.

Over the same period, the most-traded investments by Sharesight users became measurably less ethical. Based on Morningstar Sustainalytics data, the average ESG risk score across the platform’s most-traded holdings rose from 21.2 to 24.8. In plain terms, the instruments Australian investors were actively trading carried more environmental, social and governance risk in 2025 than they did in 2021. Independently, the implied MSCI ESG rating for those same holdings dropped a full letter grade, from A/AA down to BBB/A.

ESG funds fall out of favour

Four years ago, ethical investing was a mainstream retail behaviour. ESG-focused ETFs — including Betashares Global Sustainability Leaders (ETHI), Betashares Australian Sustainability Leaders (FAIR), and Vanguard’s ethically conscious funds (VESG and VETH) — were widely held across Sharesight portfolios and ranked prominently among the platform’s most-traded instruments.

By 2025, most of those products had dropped significantly in the rankings or disappeared from the top 250 entirely.

The shift to high-growth, high-risk assets

The decline in ESG exposure has coincided with a clear rotation into higher-growth and higher-risk assets. The investments that gained ground in their place tell their own story: US technology megacaps, cryptocurrencies including Bitcoin and Ethereum, uranium and nuclear energy stocks, defence and aerospace companies, and leveraged Nasdaq-linked ETFs.

It is a markedly different set of priorities from the 2021 cohort: less values-driven, more return-driven.

Douglas Morris, CEO at Sharesight said, “ESG investing had its boom, and our data shows exactly when that peaked: late 2021. What we’ve seen since is a steady, measurable retreat not in what investors say they care about, but in what they actually buy. The holdings that defined the ethical investing era have been replaced almost entirely by performance-driven choices that reflect the global reality.”

“Ethical ETFs were a meaningful part of retail portfolios just a few years ago. They’ve now been overtaken by tech, crypto and energy exposures. What the data reflects is less about ideology shifting and more about where investors believe the strongest returns will come from, and right now, that’s not ESG.”

“What makes this finding particularly striking is how uniform it is. This isn’t a story about one generation abandoning ESG while another embraces it; the retreat is consistent across every age group and gender we can measure. When the data points in the same direction across every demographic, that’s a meaningful signal.”

“The gap between what investors say they value and what they actually hold has always existed. Our data gives us a rare, objective window into that gap — and right now, it’s widening.”

Data Source:

The analysis is based on anonymised Sharesight user data across over 350,000 investment portfolios worldwide.

ESG fund ranking data is based on trading activity across Sharesight users in Australia, comparing the top 250 most-traded instruments in December 2021 and December 2025.
ESG risk scores are estimates derived from publicly available Morningstar Sustainalytics ratings.
Demographic trading data covers Sharesight users in Australia over the 12 months to April 2026, segmented by age group and gender.
ESG risk scores and MSCI ratings reflect estimated portfolio-weighted averages and should be interpreted as directional indicators, not precise measurements.
Sharesight is not licensed to provide financial advice. This release presents factual data observations only.

About Sharesight

Sharesight is an online portfolio tracker that empowers investors by simplifying complex investment data. With over 500,000 users globally, our aim is to provide institutional-level insights to investors of all levels, from beginners to experienced investors and intermediaries like accountants and financial advisers.

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