DWS has rolled out an emerging markets equity ETF, augmenting its existing portfolio of funds that enable investors to navigate both the challenges and prospects arising from the climate transition.
DWS now offers six ETFs within its climate transition suite.
The Xtrackers MSCI Emerging Markets Climate Transition UCITS ETF (XEMC GY) is listed on Deutsche Börse Xetra with an expense ratio of 0.19%.
The new fund brings the total number of ETFs within the suite to six. The remaining five ETFs, which debuted in March, target global developed, US, European, eurozone, and Japanese stock markets.
Each fund is linked to one of MSCI’s ‘Select Sustainability Screened CTB’ indices which satisfy the requirements of EU Climate Transition Benchmarks (EU CTBs).
Each index has been created from the index provider’s headline indices for large and mid-cap stocks within the target country or region.
The methodology first screens out violators of UN Global Compact principles, companies involved in controversial weapons and tobacco, and firms deriving significant revenue from fossil fuels.
MSCI then utilizes an optimization process to reweight the remaining constituents so as the satisfy EU CTB requirements which stipulates an immediate reduction in weighted-average greenhouse gas intensity of 30% relative to the initial universe as well as a further 7% annual decarbonization going forward.
The optimization also seeks to achieve additional objectives, although these are secondary compared to the EU CTB requirements. These secondary goals include reducing weighted average water emissions intensity and hazardous waste intensity by 30%, achieving a 10% boost in weighted average revenue derived from sustainable activities, achieving a 10% increase in the aggregate weight of companies setting clear ESG and climate-related business targets, and achieving a modest tracking error compared to the parent universe.
Each fund in the suite is classified as an Article 8 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).
The five initial ETFs, alongside their expense ratios, are presented below.
Xtrackers MSCI World Climate Transition UCITS ETF (XCTW GY); 0.19%
Xtrackers MSCI USA Climate Transition UCITS ETF (XCUD GY); 0.09%
Xtrackers MSCI Europe Climate Transition UCITS ETF (XCET GY); 0.12%
Xtrackers MSCI EMU Climate Transition UCITS ETF (XCEU GY); 0.12%
Xtrackers MSCI Japan Climate Transition UCITS ETF (XCJD GY); 0.15%
DWS also offers a comprehensive suite of Paris-aligned equity ETFs that adopt more stringent climate metrics by delivering an immediate 50% reduction in weighted-average carbon intensity compared to their initial universes as well as a 7% annual decarbonization going forward. This suite also consists of six ETFs focused on stocks from global, US, European, eurozone, Japanese, and emerging market universes.