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DWS launches emerging markets ESG equity ETF


DWS is expanding its responsible investment range with the launch of an Xtrackers exchange-traded fund (ETF) tracking an environmental, social and governance (ESG) version of MSCI’s emerging markets equity index.

The Xtrackers ESG MSCI Emerging Markets UCITS ETF tracks an index of companies meeting strict ESG criteria and low carbon requirements based on MSCI’s ESG research. The underlying index is part of the MSCI ESG Leaders Low Carbon ex Tobacco Involvement 5% Index series. The new ETF complements four other Xtrackers ETFs launched in June 2018, providing exposure to ESG-filtered equity indices tracking global, US, Japanese and European markets – which also use MSCI ESG Leaders Low Carbon ex Tobacco Involvement indices. It also complements Xtrackers II ESG EUR Corporate Bond UCITS ETF, providing ESG-tilted exposure to the euro-denominated corporate bond market.
“The expansion of our ESG Xtrackers range to cover emerging market equities will provide investors with an efficient new tool for taking exposure to this important area of the market,” said Manooj Mistry, DWS Head of Index Investing.
The new ETF’s underlying index methodology consists of a screen based on ESG requirements and another one based on carbon emissions. Companies with exposure to nuclear power, controversial weapons or tobacco production are excluded, as are companies with excessive revenues coming from areas such as alcohol, gambling or conventional weapons. The remaining companies are then given an ESG rating relative to peers, with those below a certain threshold excluded. A ‘controversies screen’ is also applied to exclude companies deemed to be involved in serious ESG controversies. The carbon emissions screening methodology is based on assessments of current emissions and potential emissions and is designed to filter out the most carbon intensive companies.
The Xtrackers ESG MSCI Emerging Markets UCITS ETF has an annual all-in fee of 0.25 per cent and is a direct, physical replication ETF. It began trading on the London Stock Exchange this morning, 21 October 2019.

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