DWS has made significant changes to six equity ETFs collectively housing over $1.8 billion in assets under management.

DWS has made significant alterations to six ETF collectively housing $1.8bn in assets.
All of the ETFs have assumed new indices that screen out certain firms based on an environmental, social, and governance (ESG) evaluation, while five of the funds have also seen their expense ratios lowered, in some cases substantially.
Most investors are likely to view the changes as beneficial, not least for the lower fees, but also because the adoption of ESG indices mirrors changes that are occurring commonly in investors’ portfolios.
However, some of the ETFs have also notably changed their investment style, such as by switching from a factor-based to a traditional market capitalization-weighted approach or by expanding coverage from a specific size segment of the market to a broader universe.
Investors were made aware of these changes in early September and were given several weeks to redeem their shares without incurring redemption fees; however, those departing from the funds may have triggered a taxable event and/or incurred trading expenses.
The ETFs have been renamed to better reflect their updated strategies.
ESG approach
Each incoming index is part of index provider MSCI‘s ‘ESG Screened’ family. These indices harness the capabilities of MSCI’s ESG research division to exclude companies associated with weapons or tobacco, firms that derive significant revenue from thermal coal or oil sands extraction, and violators of UN Global Compact principles.
The remaining constituents are assigned ESG ratings that reflect how well each company manages key ESG issues relative to industry peers, with the firms with the lowest rating of “CCC” also removed.
The changes
The $1.4bn Xtrackers MSCI AC World UCITS ETF has been renamed the Xtrackers MSCI AC World ESG Screened UCITS ETF. The fund has maintained its original investment core mandate of providing exposure to large and mid-cap stocks across both developed and emerging markets globally. The ETF’s expense ratio is also remaining constant at 0.25%.
The $110m Xtrackers MSCI World High Dividend Yield UCITS ETF has been renamed as the Xtrackers MSCI World ESG Screened UCITS ETF. This fund previously targeted a selection of large and mid-cap developed market stocks with higher-than-average dividend yields and quality characteristics. It now provides broad exposure to large and mid-cap stocks from developed markets, thus abandoning its factor tilts. The ETF’s expense ratio has been reduced from 0.29% to 0.19%.
The $110m Xtrackers Russell Midcap UCITS ETF has been renamed the Xtrackers MSCI USA ESG Screened UCITS ETF. The fund previously exclusively targeted mid-cap stocks from the US equity market. It now provides exposure to both large and mid-cap stocks listed in the US. The ETF’s expense ratio has been reduced from 0.35% to 0.07%.
The $40m Xtrackers MSCI Europe Mid Cap UCITS ETF has been renamed the Xtrackers MSCI Europe ESG Screened UCITS ETF. The fund previously targeted mid-cap stocks from developed markets in Europe. It now provides exposure to large and mid-cap stocks listed in European developed markets. The ETF’s expense ratio has been reduced from 0.25% to 0.12%.
The $30m Xtrackers MSCI EMU Minimum Volatility UCITS ETF has been renamed as the Xtrackers MSCI EMU ESG Screened UCITS ETF. It previously provided exposure to large and mid-cap stocks from developed market eurozone countries, weighting its constituents so as to achieve the lowest portfolio variance while staying within certain risk and diversification parameters. It now provides traditional market-cap-weighted exposure to large and mid-cap stocks from developed market eurozone countries. The ETF’s expense ratio has been reduced from 0.25% to 0.12%.
Finally, the $150m Xtrackers JPX-Nikkei 400 UCITS ETF has been renamed the Xtrackers MSCI Japan ESG Screened UCITS ETF. The fund previously tracked the JPX-Nikkei 400 Index which consists of 400 market-cap-weighted Japanese equities that are selected based on a combination of market capitalization, profitability, and corporate governance. The new index is based on the MSCI Japan which references the market-cap-weighted performance of Japan’s entire large and mid-cap equity markets. The expense ratio of the ETF’s unhedged share class has been reduced from 0.20% to 0.15%, while the expense ratios on the GBP-hedged, EUR-hedged, and USD-hedged share classes have been reduced from 0.30% to 0.25%.
Michael Mohr, Head of Passive Products at DWS, said: “This ambitious program of switches, alongside fee cuts on certain ETFs to keep them as competitive as possible, creates an extensive range of Xtrackers ESG ETFs which we are confident will be well received by the investment community.”