The Betashares Global Sustainability Leaders ETF (ASX: ETHI) is one of the largest and best-known ethical Investment funds on the Australian market, offering exposure to global companies screened as climate leaders while excluding fossil fuels and a range of other activities. It has long been a flagship choice for investors who want their portfolios to reflect environmental and ethical values.

In September 2026, with a more hawkish US Federal Reserve and periodic Volatility in global markets, the question for ETHI is whether its sustainability-screened portfolio can reignite the momentum it has shown over the longer term. This article examines what ETHI holds, why it is in focus, and the catalysts and risks ahead.

What is the ETHI ETF?

ETHI is a passive ETF issued by Betashares. It aims to track the performance of the Nasdaq Future Global Sustainability Leaders Index, before fees and expenses. The index selects large global companies identified as climate leaders — with a carbon footprint substantially better than the average for their industry — that have also passed a series of ethical screens. The fund charges management costs of 0.59% per annum, higher than plain-vanilla global index funds, reflecting its specialised screening. It listed in 2017 and pays distributions.

The exclusions are central to ETHI’s identity. The fund screens out companies with direct or significant exposure to fossil fuels, as well as those involved in activities such as tobacco, gambling, armaments, and other areas deemed inconsistent with responsible investment. The result is a portfolio of global developed-market companies with a pronounced tilt away from energy and towards technology, healthcare and consumer names. ETHI is currency-unhedged, so returns for Australian investors are affected by moves in the Australian dollar.

What is driving interest now?

ETHI’s appeal is partly values-driven and partly performance-driven. For many investors, the fund’s ethical screens are the primary attraction, allowing them to avoid fossil fuels and other excluded sectors. Demand for responsible investment Options has been a structural trend, and ETHI has been one of the main vehicles for it in Australia.

On performance, ETHI is fundamentally a global Equity fund with a growth and technology tilt, so it is driven by the same forces as world markets — the AI theme, US mega-cap technology, and global growth — while the fossil-fuel exclusion means it can behave differently from the broad market during energy-price swings. The more hawkish US Federal Reserve in 2026 and the direction of the Australian dollar both feed into its unhedged returns. Because it avoids energy, ETHI can lag when fossil-fuel stocks rally and outperform when they fall.

Portfolio and holdings

ETHI’s portfolio is dominated by large global companies that pass its climate and ethical screens. Independent data has shown holdings led by names such as Nvidia, Visa, Home Depot, Mastercard and Toyota, with a heavy weighting towards technology and other growth sectors and a notable absence of traditional energy companies. The top 10 holdings represent a meaningful share of the fund.

This structure means ETHI’s returns are shaped both by the performance of global Growth Stocks and by the effect of its exclusions. The fossil-fuel screen is the clearest differentiator: it removes a whole sector from the portfolio, which can help or hurt relative performance depending on how energy stocks are faring. Investors should understand that ETHI is a concentrated, growth-tilted global fund as well as an ethical one.

Catalysts to watch

Several factors could influence ETHI in the coming months: the trajectory of US Federal Reserve policy and its effect on growth stocks; the Earnings of the largest global technology holdings; the performance of energy stocks, which ETHI excludes; continued investor demand for responsible investment options; and the AUD/USD Exchange Rate for unhedged returns.

Risks

ETHI carries the risks of a concentrated, growth-tilted global equity fund. Technology and single-stock concentration mean a repricing of growth stocks could weigh on returns. The fossil-fuel exclusion introduces tracking difference from the broad market, which can help or hurt. Currency risk is unhedged. Its higher fee than plain-vanilla global funds is a consideration for cost-sensitive investors. Valuation risk after strong long-term gains, country and sector concentration, and general market and geopolitical risks all apply. Definitions of what counts as sustainable can also evolve, affecting the portfolio.

Outlook

ETHI remains a leading choice for Australians who want global equity exposure aligned with climate and ethical screens, and it has rewarded long-term holders while going through periods of underperformance. Its near-term fortunes rest on global growth stocks, the technology sector and the relative performance of the energy names it excludes. Investors may be watching global technology earnings, US rate decisions, energy prices and the Australian dollar for direction. The outlook may depend on whether growth and sustainability-screened stocks can reassert Leadership and on how the currency moves for unhedged Australian investors.