Xtrackers has expanded its small-cap ETF offering writing that investors now have efficient access to global and European small caps – both in traditional versions and in those that incorporate ESG strategies.
“Often considered particularly innovative, specialised, and growth-oriented, but also volatile, listed small companies (‘small caps’) are active in new or fast-growing industries or serve specialised market niches, among other things.”
The firm writes that the launch of three new ETFs specifically complements the existing product range: in addition to a broadly diversified global small-cap ETF – available in distributing and accumulating versions – two strategies incorporating ESG criteria for global and European small caps are being launched.
Three of the four new ETF share classes offer access to global small caps based on the MSCI World Small Cap Index. This comprises around 4,000 equities from companies with relatively low market capitalisation from 23 industrialised countries. The index thus covers around 14 per cent of global free float market capitalisation – a significant portion of the investable equity universe that is not included in the classic MSCI World Index.
Small cap indices on European and global stocks also offer special internal diversification. Measured in terms of the number of stocks, the natural capping of index weights or the industry and country distribution in the corresponding indices, this sets them apart from traditional large and mid-cap indices.
By adding small caps, an ETF portfolio can not only be expanded by several thousand stocks but also broadened to improve risk/return over the long term, the firm says.
‘With these new products, we want to offer our investors the opportunity to efficiently expand their core equity portfolio, closing a strategic gap,’ says Michael Mohr, Global Head of Xtrackers Product. ‘It is particularly noteworthy that our MSCI World Small Cap ETF is currently the most cost-effective UCITS-listed product in its category.’
‘This year, portfolio diversification is more important than ever, especially for institutional investors,’ says Simon Klein, Global Head of Xtrackers Sales at DWS. ‘Broad small-cap ETFs enable investors to improve the existing risk diversification within traditional equity portfolios in terms of individual stocks, but also in terms of countries and industries.’
