Amundi has expanded its environmental, social, and governance ETF range, with the addition of a new ETF tracking the recently devised DAX 50 ESG Index.
Amundi has rolled out an ETF based on the recently launched DAX 50 ESG Index from Qontigo.
Offering broad exposure to the German equity market while taking into account sustainability considerations, the Amundi DAX 50 ESG UCITS ETF (DECD GY) has listed on Xetra and comes with a total expense ratio of 0.19%.
The fund, which trades in euros, is composed of 50 of the largest German companies with strong sustainable profiles.
“We are delighted to enhance our offering of responsible ETFs, providing investors with the choices they need to implement cost-effective ESG portfolios,” said Fannie Wurtz, Head of ETF, Indexing and Smart Beta at Amundi.
“Building on our existing range of core ESG ETFs, we are now extending our offer through country flagship exposures like the S&P 500 ESG and today the DAX 50 ESG.”
Index methodology
Introduced by Qontigo in March this year, the DAX 50 ESG is derived from the HDAX universe of stocks which, in turn, consists of all member constituents of the large-cap DAX, the mid-cap MDAX, and the technology-focused TecDAX indices.
Fundamental to the index construction process is the incorporation of sustainability insights from ESG analytics firm Sustainalytics to determine the index’s constituents and assign weights.
This process first excludes companies that are involved with controversial weapons, tobacco, thermal coal, nuclear power, and military contracts, as well as those that are deemed to be in violation of any UN Global Compact Principles.
The remaining companies in the universe are then assigned an ESG score based on over 70 core and industry-specific indicators which measure a company’s level of ESG preparedness, the quality of its ESG disclosures, and its quantitative and qualitative ESG performance.
The score incorporates a best-of-sector analysis to compare companies within a given sector to industry best practices. Underlying each industry group template is a customized weight matrix designed to further highlight the key ESG issues faced by each sector.
Finally, securities are ranked according to a combined score across three parameters: ESG score, order book volume, and free-float market capitalization. The 50 top-ranked companies are selected for inclusion and weighted by free-float market capitalization subject to a single stock cap of 7%.
The index is reconstituted and rebalanced on a quarterly basis. DAX fast-entry and fast-exit rules apply, including for any sustainability breaches.
Relative to the regular DAX, the index is overweight real estate, health care, communication services, financials and industrials, and underweight utilities, consumer staples and consumer discretionary. It is roughly neutral on materials.
Back-tested performance is broadly in line with that of the conventional DAX.
The fund will compete against the Lyxor 1 DAX 50 ESG UCITS ETF which debuted in April earlier this year. The Lyxor fund is listed on Xetra (E909 GY) and SIX Swiss Exchange (E909 SW) and comes with a TER of 0.23%.