DWS has more than doubled its Europe-listed suite of thematic ETFs that target companies positively impacting the United Nations Sustainable Development Goals (SDGs).
DWS now offers seven ETFs that are designed to support United Nations Sustainable Development Goals.
Adopted by UN member countries in September 2015, the SDGs are a set of 17 goals established to guide international cooperation on issues such as water sanitation, poverty, climate change, and gender equality.
The goals, which are further broken down into 169 measurable targets, seek to promote active participation from governments, corporations, and investors.
DWS debuted three ETFs last month targeting the ninth, eleventh, and twelfth UN SDGs which relate to industry, innovation & infrastructure, sustainable cities, and the circular economy, respectively.
The firm has now rolled out an additional four ETFs as part of the same suite. Three of these newest funds target the third, sixth, and seventh UN SDGs which relate to good health, clean water & sanitation, and affordable & clean energy, respectively.
The fourth ETF, meanwhile, is unique in that it is geared towards delivering diversified exposure across multiple SDGs.
Each ETF in the suite comes with an expense ratio of 0.35% and is classified as an Article 8 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).
Income is accumulated within the portfolios.
Methodology
Each fund tracks an index developed by MSCI that is constructed from the index provider’s flagship global equity benchmark – the MSCI ACWI IMI – which comprises large, mid, and small-cap stocks from both developed and emerging markets.
The methodology first excludes companies that are embroiled in severe ESG-related controversies or are proven UN Global Compact violators, as well as firms with business activities linked to controversial and civilian weapons, tobacco, thermal coal, and oil sands.
The remaining stocks are then assigned ESG ratings, based on MSCI‘s seven-point scale from CCC to AAA, which reflect a company’s performance relative to sector peers across a broad range of ESG metrics. Firms with ESG ratings below BB (lower-average) are excluded.
From the screened universe, each index then builds two separate portfolios: an ‘SDG Impact’ portfolio which accounts for 75% of the index’s total weight at rebalance, and an ‘SDG Thematic’ portfolio which accounts for the remaining 25%.
The SDG Impact portfolio consists of stocks that generate at least 50% of their revenue from products and services that directly support the targeted SDG. Constituents within the SDG Impact portfolio are weighted by the product of their float-adjusted market capitalization and their aggregated revenue linked to the targeted SDG.
The SDG Thematic portfolio, meanwhile, consists of stocks that are not part of the SDG Impact portfolio but are deemed to have sufficient linkage to sub-themes related to the targeted SDG. Constituents within the SDG Thematic portfolio are weighted by the product of their float-adjusted market capitalization and a relevance score which indicates the firm’s exposure to the sub-themes.
Good health
The Xtrackers MSCI Global SDG 3 Good Health UCITS ETF has been listed on London Stock Exchange in US dollars (XDG3 LN) and pound sterling (SDG3 LN) as well as on Deutsche Börse Xetra in euros (XDG3 GY).
The fund tracks the MSCI ACWI IMI SDG 3 Good Health and Well-Being Select Index which focuses on companies working to ensure healthy lives and promote well-being at all ages.
Companies within the SDG Impact portfolio include those with business activities related to major disease treatment, sanitation, contraceptives, conventional pollution control solutions, and low toxicity/VOC solutions.
Companies within the SDG Thematic portfolio include those associated with the ‘Digital Health’ theme such as firms with operations linked to medical robots, clinical lab automation, automated diagnostics, telemedicine & telehealth, bioinformatics & healthcare data analytics, advanced medical materials & devices, and healthcare infotech.
Clean water & sanitation
The Xtrackers MSCI Global SDG 6 Clean Water & Sanitation UCITS ETF has been listed on London Stock Exchange in US dollars (XDG6 LN) and pound sterling (SDG6 LN) as well as on Deutsche Börse Xetra in euros (XDG6 GY).
The fund tracks the MSCI ACWI IMI SDG 6 Clean Water and Sanitation Select Index which focuses on companies working to ensure the availability and sustainable management of water and sanitation.
Companies within the SDG Impact portfolio include those with business operations linked to sustainable water supply, water sanitation, and sustainable agriculture.
Companies within the SDG Thematic portfolio, meanwhile, include those that are involved in water supply, water utilities, water treatment, and water-related equipment.
Affordable & clean energy
The Xtrackers MSCI Global SDG 7 Affordable and Clean Energy UCITS ETF has been listed on London Stock Exchange in US dollars (XDG7 LN) and pound sterling (SDG7 LN) as well as on Deutsche Börse Xetra in euros (XDG7 GY).
The fund is linked to the MSCI ACWI IMI SDG 7 Affordable and Clean Energy Select Index which focuses on companies that are working to ensure access to affordable, reliable, sustainable, and modern energy.
Companies within the SDG Impact portfolio include those with business operations linked to alternative energy, demand-side management, smart grids, energy storage, and hydropower generation.
Companies within the SDG Thematic portfolio include firms linked to an ‘Alternative Energy’ theme such as companies with operations related to batteries, smart grids, and future fuels and technology.
Diversified SDGs
The Xtrackers MSCI Global SDGs UCITS ETF has been listed on London Stock Exchange in US dollars (XDGI LN) and pound sterling (SDGX LN) as well as on Deutsche Börse Xetra in euros (XDGI GY).
The fund is linked to the MSCI ACWI IMI SDG Impact Select Index which covers companies associated with a positive contribution to any of the 17 SDGs.
The index includes 50 companies from each GICS sector, selecting the firms with the highest proportion of revenue derived from any of the following sub-themes: alternative energy, hydropower generation, energy efficiency, green buildings, sustainable water, pollution prevention, sustainable agriculture, nutrition, major disease treatment, sanitation, contraceptives, affordable real estate, SME finance, education, and connectivity.
Constituents are weighted by the product of their float-adjusted market capitalization and their thematic revenue scores, subject to a single stock cap of 4.5% and a sector limit of 20%.