DWS adds emerging markets ETF to ‘ESG Screened’ suite

DWS is set to introduce an emerging markets equity ETF as part of the firm’s ‘ESG Screened’ suite in Europe.

The Xtrackers MSCI Emerging Markets ESG Screened UCITS ETF is being created by repurposing the Xtrackers FTSE All-World Ex-UK ETF which currently houses $60 million in assets.

As of 12 April, the ETF will switch from being referenced to the FTSE All-World ex UK Index and will begin to track the MSCI Emerging Markets Select ESG Screened Index.

The index consists of large and mid-cap companies across 25 emerging market countries while excluding firms from industries considered less reputable as well as firms with poor ESG profiles.

The methodology harnesses 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. Firms with the lowest rating of “CCC” are also removed.

The index weights its constituents by float-adjusted market capitalization while aiming to maintain a risk profile similar to the broad emerging markets universe by limiting deviations in country and sector weights relative to the MSCI Emerging Markets Index.

The ETF will come with an expense ratio of 0.18%.

The fund is currently listed on London Stock Exchange and Borsa Italiana. It is not yet clear whether DWS plans to change the ETF’s ticker codes or roll out further listings on other exchanges.

DWS introduced six ESG Screened ETFs in October 2021 by also converting a series of existing funds to new underlying indices. The suite consists of funds targeting global, global developed, US, European, eurozone, and Japanese equity markets.