DWS has launched two new socially responsible US equity ETFs in Europe based on the S&P 500.
The Xtrackers S&P 500 ESG UCITS ETF provides market-cap-weighted exposure to approximately two-thirds of the total number of S&P 500 constituents, selecting companies with the most robust environmental, social, and governance (ESG) profiles.
The fund has been listed on London Stock Exchange in US dollars (XZSP LN) and pound sterling (XZSS LN) as well as on Deutsche Börse Xetra in euros (XZSP GY).
It comes with an expense ratio of 0.08%.
The Xtrackers S&P 500 Equal Weight ESG UCITS ETF, meanwhile, tracks a slightly smaller subset of the S&P 500, also selecting firms with the most robust ESG profiles. Constituents are equally weighted on a quarterly basis.
The fund is also available on LSE in US dollars (XZEW LN) and pound sterling (XZES LN) as well as on Deutsche Börse Xetra in euros (XZEW GY).
Its expense ratio is 0.17%.
Methodologies
The Xtrackers S&P 500 ESG UCITS ETF tracks the S&P 500 ESG Index which screens the S&P 500 to remove proven violators of UN Global Compact principles, companies embroiled in severe ESG-related controversies, and firms with business activities linked to alcohol, civilian firearms, controversial weapons, gambling, genetically modified organisms, military weapons, nuclear power, oil & gas, palm oil, recreational cannabis, thermal coal, and tobacco.
The index then selects the companies with the highest S&P DJI ESG scores while targeting 75% of the float-adjusted market capitalization from each Global Industry Classification Standard (GICS) industry group within the S&P 500.
The Xtrackers S&P 500 Equal Weight ESG UCITS ETF, meanwhile, is linked to the S&P 500 Equal Weight ESG Index which follows similar exclusions and selection criteria but targets 60% of the float-adjusted market capitalization from each GICS industry group. Constituents are assigned equal weights.
Each index is reconstituted annually and rebalanced on a quarterly basis. Buffer rules help to limit unnecessary turnover.
While the ETFs join an increasingly crowded field of ESG-tailored S&P 500 ETFs in Europe, they are relatively competitive on price.
The cheapest S&P 500 ESG ETF in Europe is the $70m iShares S&P 500 ESG UCITS ETF (ESPX) which comes with an expense ratio of 0.07%, while the $2.7bn Amundi S&P 500 ESG UCITS ETF (F500 GY) costs 0.12%.
Amundi also offers an equally weighted S&P 500 ESG ETF – the $240m Amundi S&P 500 Equal Weight ESG Leaders UCITS ETF (WELF GY) has an expense ratio of 0.17%.