DSI is kind of the OG of socially responsible investing ETFs in the US. Launched in 2006, it tracks the MSCI KLD 400 Social Index, which itself dates back to 1990 under its original name (the Domini 400 Social Index) and was the first major SRI index in America.

Why are we talking about a secular ESG fund on a faith-based investing site? Because the overlap between mainstream ESG screening and faith-based screening is bigger than most people realize, and for some religious investors, DSI actually does more of what they want than some explicitly faith-labeled funds.

Let's get into the details and figure out where faith and secular ESG line up, and where they don't.

The KLD 400 Origin Story

Amy Domini, Peter Kinder, and Steve Lydenberg founded Kinder, Lydenberg, Domini & Co (KLD) in 1988 and launched the Domini 400 Social Index in 1990. Their idea was to build a version of the S&P 500 that excluded companies involved in what they saw as socially harmful activities (tobacco, alcohol, weapons, nuclear power) and included companies with better labor and environmental practices.

KLD was eventually acquired by MSCI, and the index was renamed the MSCI KLD 400 Social Index. The methodology has evolved over the decades but the core idea is still the same: pick roughly 400 US stocks from the MSCI USA IMI universe (about 3,000 names) based on ESG performance and specific exclusions.

DSI is iShares' ETF that tracks this index. Launched in November 2006, it's one of the oldest pure-play SRI ETFs in the US and has accumulated a meaningful track record.

The KLD 400 Screening Logic

The index applies both exclusions and ratings-based inclusion:

Exclusions (categorical): alcohol production, tobacco production, gambling, nuclear power, adult entertainment, civilian firearms, military weapons, and GMOs (genetically modified organisms) in agriculture.

ESG ratings inclusion: Companies must have an MSCI ESG Rating of BB or above (on a CCC to AAA scale) to be eligible. This is a positive screen: you can't just avoid bad things, you also need a minimum level of ESG performance.

Controversy screening: Companies involved in ongoing major controversies (environmental disasters, labor violations, human rights issues) are excluded or downweighted.

The final index holds roughly 400 names, selected to optimize ESG characteristics while maintaining reasonable sector diversification and tracking error to the broader MSCI USA IMI.

What DSI Holds

Top holdings in DSI are generally mainstream tech names that pass ESG screens: Microsoft, Nvidia, Alphabet, Meta, Tesla, Eli Lilly, Salesforce, Visa, Mastercard, Adobe, and similar. Apple has historically been in and out based on ESG controversies (labor concerns in supply chain). Amazon has faced similar issues.

Sector breakdown is roughly: 30 to 35 percent technology, 12 to 16 percent healthcare, 10 to 14 percent financial services, 10 to 12 percent consumer discretionary, with smaller slices in industrials (underweighted due to weapons exclusions), consumer staples (no tobacco or alcohol), materials, energy (low weight, ESG sensitivity), and utilities (no nuclear).

About 400 holdings makes DSI more diversified than most faith-based ETFs. You're getting broader name exposure than BIBL, CATH, SPUS, or HLAL.

Expense Ratio: 0.25 Percent

DSI charges 0.25 percent per year. That's cheaper than any explicitly faith-based ETF on the US market. Part of this is iShares scale, and part of this is that ESG products in general have been competing on price more aggressively than faith-based products.

For cost-conscious investors, DSI's 0.25 percent is attractive. Over 20 years on a 100,000 dollar position, you save roughly 4,000 to 5,000 dollars in fees compared to a 0.49 percent halal ETF or a 0.92 percent Catholic mutual fund.

AUM: Around 3.5 to 4 Billion Dollars

DSI is actually larger than most faith-based funds. Assets are approximately 3.5 to 4 billion dollars as of early 2026. That's meaningful scale and reflects sustained advisor and institutional demand for the fund over nearly two decades.

Performance Estimates

DSI tracks the MSCI KLD 400 Social Index, which has a meaningful tracking relationship to the broader US market but with drift based on sector weights.

One-year total return: approximately 22 to 26 percent.

Three-year annualized: approximately 13 to 16 percent.

Five-year annualized: approximately 12 to 14 percent.

Ten-year annualized: approximately 11 to 13 percent.

Since inception (November 2006): approximately 9 to 10 percent annualized.

DSI has generally tracked the broader US market within plus or minus 1 to 2 percent per year. It has lagged during periods when energy and defense led (both sectors are underweighted), and kept pace or led during periods when tech and healthcare led.

Where Faith and Secular ESG Overlap

This is the interesting part. A lot of religious investors would be happy with DSI's screening even though it isn't explicitly faith-based.

Alcohol and tobacco: DSI excludes both. Many faith traditions (Muslim, Mormon, evangelical Christian, some Catholic) also exclude these. Overlap.

Gambling: DSI excludes. Most faith traditions exclude. Overlap.

Weapons: DSI excludes civilian firearms and military weapons. Christians, Catholics, Mennonites, and some Muslims support these exclusions. Varies by specific tradition.

Adult entertainment: DSI excludes. All faith traditions exclude. Overlap.

Environmental concerns: DSI weights toward better environmental performers. Catholic social teaching (especially Laudato Si'), Mennonite peace and justice, and many other faith traditions align here. Overlap.

Labor practices: DSI uses ESG ratings that include labor. Most faith traditions care about treating workers justly. Overlap.

So for many religious investors, DSI already screens on most of the things they care about.

Where Faith and Secular ESG Diverge

Abortion: DSI doesn't explicitly exclude companies involved in abortion services or advocacy. Catholic and evangelical investors typically want this exclusion. Gap.

Contraception: Same issue. Not screened by DSI. Gap for Catholic investors specifically.

LGBTQ+ advocacy: DSI doesn't penalize companies for LGBTQ+ support; many ESG frameworks positively weight it. Evangelical BRI funds like Inspire explicitly exclude companies with certain LGBTQ+ advocacy activities. Significant gap.

Interest-bearing debt: DSI holds banks and financial services. Muslim investors following classical fiqh want to exclude conventional financial services. Big gap.

Pork, alcohol, specific food industries for Muslims: DSI doesn't filter based on compliant or non-compliant food criteria. Gap for Muslims.

Embryonic stem cell research: Not explicitly screened. Gap for Catholic and evangelical investors.

So DSI gets a lot right from a faith perspective, but there are specific theological concerns (especially around life, sexual ethics, and interest) that secular ESG doesn't address.

Who Should Use DSI as a Faith Investment

DSI works surprisingly well for some religious investors:
- Mennonites and Anabaptists (the overlap with peace-and-justice concerns is strong)
- Quakers (similar to Anabaptist concerns, with strong overlap on weapons and labor)
- Some Protestant Christians whose primary concerns are alcohol, tobacco, gambling, and weapons rather than abortion or LGBTQ+ advocacy
- Liberal or moderate Catholics whose main concerns are environmental and social justice rather than sexual ethics
- Secular-leaning Jewish investors who care about ethical business practices
- Unitarian Universalists and other liberal religious traditions

Who Should Not Use DSI as Their Main Faith Investment

Observant Muslims (financial services inclusion alone makes it non-compliant)
Traditional Catholics focused on life and marriage issues (specific exclusions they care about are missing)
Evangelical Christians using BRI frameworks like Inspire or Timothy Plan (the screening philosophy is different)
Orthodox Jewish investors with specific religious investment requirements
Anyone whose faith tradition has specific prohibitions DSI doesn't address

The Practical Blend

A sophisticated approach for some religious investors is to use DSI as one component of a portfolio rather than the only holding. For example:

A moderately progressive Catholic investor might hold CATH as a core (to get the specific life-issue exclusions) plus DSI as a complement (to add ESG rigor on environmental and labor concerns)
A Muslim investor with broader ESG concerns could hold SPUS (for Islamic compliance) and might use DSI in a secular portion of their portfolio for ESG exposure
A Christian who wants both BRI and ESG could blend Inspire ETFs with DSI to get both kinds of screening

This kind of portfolio construction requires you to think about what each fund contributes rather than assuming one fund does everything.

Bottom Line

DSI isn't marketed as a faith-based fund, but for many religious investors, the overlap with their values is significant. Cheap, liquid, well-established, and with nearly two decades of operating history, it's worth understanding even if you're committed to explicitly faith-labeled funds.

For investors whose religious values center on secular-adjacent concerns like environmental stewardship, labor practices, weapons avoidance, and substance-related exclusions, DSI may actually serve your values better than some explicitly faith-based alternatives. For investors whose religious values include specific theological concerns (interest, life issues, specific sexual ethics, dietary laws), DSI won't fully meet your needs and you'll want to combine it with faith-specific funds or use different options entirely.

Understand what DSI does and doesn't screen for, compare it to your own religious framework, and decide based on fit rather than label.

iShares MSCI KLD 400 Social ETF (DSI): ESG vs Faith Overlap