DWS has launched a trio of new ETFs in the US providing ESG-tailored exposure to US equities with growth, value, or sustainable dividend characteristics.
Arne Noack, Head of Systematic Investment Solutions, Americas at DWS
Listed on Cboe BZX Exchange, the three funds are the Xtrackers S&P 500 Growth ESG ETF (SNPG US), Xtrackers S&P 500 Value ESG ETF (SNPV US), and Xtrackers S&P ESG Dividend Aristocrats ETF (SNPD US).
The new listings are designed to serve as core building blocks for socially responsible portfolios. Each fund comes with an expense ratio of 0.15% which is notably competitive for its market segment.
Arne Noack, Head of Systematic Investment Solutions, Americas at DWS, said: “At a time of high inflation and rising interest rates, investors are looking for products that allow them to target specific investment styles in order to tailor their portfolios in line with market expectations. Our growth, value, and dividend ESG ETFs let them do that, reinforcing DWS’s capacity to provide innovative ESG-centric investment solutions across asset classes.”
Amanda Rebello, Head of Passive Sales, US Onshore at DWS, added: “We are pleased to continue providing innovation in the industry by developing funds that can meet the needs of investors seeking competitively priced core building blocks of a portfolio that also incorporate ESG investment considerations. With the addition of these new funds, ESG investing can now be embedded into all-cap, all-style solutions for US equities.”
Methodologies
The Xtrackers S&P 500 Growth ESG ETF and Xtrackers S&P 500 Value ESG ETF track the S&P 500 Growth ESG Index and S&P 500 Value ESG Index, respectively. The indices are constructed from the parent S&P 500 Growth Index and S&P 500 Value Index which consist of growth- or value-oriented stocks selected from the S&P 500.
The Xtrackers S&P ESG Dividend Aristocrats ETF, meanwhile, is linked to the S&P ESG High Yield Dividend Aristocrats Index which is constructed from the parent S&P High Yield Dividend Aristocrats Index, a reference for stocks from the broad market S&P Composite 1500 Index which have consistently increased their dividends every year for at least 20 years.
All three of the ETFs’ underlying indices utilize the same ESG screening process, harnessing data from Sustainalytics to remove violators of UN Global Compact principles, companies embroiled in severe ESG-related controversies, and firms with significant business activities linked to controversial weapons, thermal coal, tobacco, oil sands, and weapons.
The S&P ESG High Yield Dividend Aristocrats Index selects all remaining eligible constituents and weights them by indicated annual dividend yield subject to a single stock cap of 4%.
The S&P 500 Growth ESG Index and S&P 500 Value ESG Index, however, utilize an additional ESG screening step. From their remaining universes, the methodology selects the companies with the highest overall ESG scores whilst aiming to maintain 75% of the float-adjusted market capitalization of each Global Industry Classification Standard (GICS) Industry Group within the parent indices.
Constituents are weighted by float-adjusted market capitalization subject to a single stock cap of 9% and a cumulative cap of 50% on all stocks with weights above 4.8%.