The Betashares Australian Sustainability Leaders ETF (ASX: FAIR) is the largest ethical Australian shares ETF on the market, offering exposure to domestic companies screened for sustainability while excluding fossil fuels and other activities deemed inconsistent with responsible investing. For values-focused investors, it has been a flagship way to invest in Australia without the big banks and miners that dominate standard funds.

In September 2026, FAIR faces a tougher test: its exclusions have weighed on recent performance, and its tilt towards defensive and rate-sensitive sectors has been challenged by the higher-rate environment. This article explains how FAIR works, why it is in focus, and the catalysts and risks that could shape it from here.

What is the FAIR ETF?

FAIR is a passive ETF issued by Betashares. It aims to track, before fees and expenses, an index of Australian companies that have passed sustainability screens — excluding companies with direct or significant exposure to fossil fuels, and those engaged in activities deemed inconsistent with responsible investment. The methodology also preferences companies classified as sustainability leaders based on alignment with the United Nations Sustainable Development Goals. Notably, FAIR does not invest in any of the big four banks or large Australian Mining companies. It charges a management fee of 0.49% per annum and pays distributions.

The exclusions are the defining feature. Because it screens out fossil fuels, the major banks and large miners, FAIR looks very different from a standard Australian shares fund. Instead of being dominated by banks and resource companies, its portfolio is weighted towards healthcare, technology, financial services outside the big four, property and other sectors. That gives it a distinctive risk-and-return profile, one that can diverge significantly from the broad Australian market depending on how those sectors perform.

What is driving interest now?

FAIR’s appeal is primarily values-driven: it allows investors to gain Australian Equity exposure while avoiding fossil fuels, the big banks and large miners. Demand for responsible Investment has been a structural trend, and FAIR has been the dominant domestic ethical option.

The near-term challenge, however, is performance. By excluding the banks and miners that have driven much of the Australian market’s returns, and by tilting towards sectors such as healthcare, technology and property, FAIR has behaved very differently from the broad index — and recently that has worked against it. Its exposure to interest-rate-sensitive sectors, including property trusts, has been squeezed by restrictive monetary policy, and its recent returns have been negative. The rate environment, the performance of its non-bank, non-miner holdings, and the value-versus-growth dynamic all feed into how FAIR fares.

Portfolio and holdings

FAIR’s portfolio is a screened selection of Australian companies, notably excluding the big four banks and large miners. Independent data has shown its holdings including names such as Cochlear, Suncorp, Xero, WiseTech Global and Brambles, giving it a tilt towards healthcare, technology, insurance, industrials and property rather than the financials-and-materials concentration of a standard fund.

This distinctive composition is the whole point of the fund, but it also drives its performance divergence. Without the banks and miners, FAIR misses out when those sectors lead, and its greater exposure to technology, healthcare and rate-sensitive property means it behaves differently through the cycle. Investors should understand that FAIR is a genuinely different portfolio from the broad Australian market — its returns reflect its screened, non-bank, non-miner composition rather than the ASX 200.

Catalysts to watch

Several factors could influence FAIR in the coming months: the RBA’s rate path, given the fund’s exposure to rate-sensitive sectors such as property; the performance of its healthcare, technology and other non-bank, non-miner holdings; whether the banks and miners it excludes continue to lead the market; continued investor demand for ethical investing; and the value-versus-growth dynamic.

Risks

FAIR carries the risks of a screened, sector-tilted equity fund. Its exclusions mean it can significantly underperform the broad market when banks and miners lead, as recent returns show. Sector concentration in healthcare, technology and property brings its own risks, including interest-rate sensitivity in property. Market risk, index-tracking risk and variability of distributions apply. Its higher fee than broad Australian Index Funds is a consideration. Definitions of what counts as a sustainability leader can also evolve, affecting the portfolio.

Outlook

FAIR remains the leading ethical Australian shares ETF, offering a genuinely different, screened portfolio for values-focused investors — but its recent performance shows the cost of excluding the market’s strongest sectors. Its near-term fortunes rest on the RBA’s rate path, the performance of its non-bank, non-miner holdings, and whether the banks and miners continue to lead. Investors may be watching rate decisions, its sector holdings and the ethical-investing trend for direction. The outlook may depend on whether its screened sectors can recover and on the direction of interest rates, particularly for its rate-sensitive property exposure.