Xtrackers by DWS has debuted an environmental, social and governance (ESG) global government bond ETF based on a comprehensive ESG sovereign bond assessment and weighting framework developed by FTSE Russell. The ETF’s index methodology aims to provide meaningful ESG tilting using an in-depth assessment system that draws upon 41 ESG indicators as well as broadly recognised external data points.
Xtrackers ESG Global Government Bond ETF has listed on the Deutsche Börse this morning and is due to list on the London Stock Exchange tomorrow. The ETF references the FTSE ESG Select World Government Bond Index – DM (FTSE ESG Select WGBI-DM). The index uses FTSE Russell’s established ESG framework for sovereign bonds with more stringent ESG tilts to overweight higher ESG performing countries and underweight lower ESG performing countries. It also incorporates exclusions for the lowest ESG performers and, in response to investor demand, countries not considered ‘free’.
ESG scores for each country are derived by evaluating each country’s performance across three ESG performance pillars (each with multiple sub-indicators): Environmental performance: considers energy, climate, and resources; Social performance: considers inequality, employment, human capital, health, and societal wellbeing and Governance performance: considers corruption, government effectiveness, political stability, regulatory quality, rule of law, and voice and accountability.
“The new Xtrackers ESG Global Government Bond ETF aims to provide enhanced ESG characteristics while maintaining attractive risk-adjusted performance metrics. The goal is to provide a depth of analysis that moves the market forward in terms of providing intelligent and nuanced ESG exposure,” says Simon Klein, DWS Global Head of Passive Sales. “With this addition to our ETF suite, investors now have a diverse range of Xtrackers ESG exposures they can use, across equities and fixed income.”
The ETF has an annual all-in fee starting at 0.20 per cent. GBP-hedged, USD-hedged and EUR-hedged share classes are also available.