DWS has built out its US suite of Environmental, Social, and Governance (ESG) ETFs with the launch of the Xtrackers MSCI USA ESG Leaders Equity ETF (USSG US) on NYSE Arca.
The fund becomes the lowest cost ETF to provide ESG-screened exposure to the US equity market.
Developed in collaboration with Ilmarinen, Finland’s largest pension insurance company, the fund provides exposure to US-listed large- and mid-cap companies with high ESG ratings relative to their sector peers.
With an expense ratio of just 0.10%, the fund becomes the lowest cost ETF providing ESG-screened exposure to the US equity market, toppling the Vanguard ESG US Stock ETF (ESGV US) which costs 0.12%.
The fund has seen some $840 million in creations in the first day of trading, most likely to be be from Ilmarinen.
The fund is linked to the MSCI USA ESG Leaders Index which utilizes MSCI’s rating methodology to evaluate corporate governance, focusing on the most relevant ESG factors by industry and risk exposure, to identify ESG leaders and laggards within each industry.
The index targets a 50% sector representation versus the parent MSCI USA Index and is weighted by free float-adjusted market cap.
“Sustainability and ESG considerations are an integral aspect of our investment strategy and overall company philosophy and have been so for almost two decades,” said Anna Hyrske, Head of Responsible Investments at Ilmarinen. “We welcome new ETF products that incorporate ESG factors in a pragmatic and efficient way. Taking material and relevant ESG data into account helps us achieve our goal of investing pension assets so that the return also secures the pensions of the future generations.”
Fiona Bassett, Global Co-Head of Passive Asset Management and Global Co-Head of Product, DWS, added, “Our aim is to be the partner of choice for our clients and to develop and provide solutions that allow them to fulfill their financial objectives in a way that is aligned with their core values. Our focus on our clients is paramount and we are delighted to collaborate with Ilmarinen to develop and bring USSG to market.
“This latest expansion in our ESG offering will provide investors the opportunity to get exposure to the US market while ensuring they invest in companies with the highest ESG performance and to do so at a highly competitive price point.”
The new launch brings the total number of funds within DWS’s ESG Leaders ETF suite to four. The other funds are as follows:
Xtrackers MSCI ACWI ex USA ESG Leaders Equity ETF (ACSG US); 0.16%
Xtrackers MSCI EAFE ESG Leaders Equity ETF (EASG US); 0.14%
Xtrackers MSCI Emerging Markets ESG Leaders Equity ETF (EMSG US); 0.20%