i

Risk Considerations

Investors should note that the Xtrackers ETFs & ETCs are not capital protected or guaranteed and investors in each Xtrackers ETF or ETC should be prepared and able to sustain losses up to the total capital invested. The value of an investment in an Xtrackers ETF or ETC may go down as well as up and past performance does not predict future returns. Investment in Xtrackers ETFs or ETCs involve risks. For a list of related risks please click on the Risks and Terms tab.

Overnight ETFs – An alternative to Easy Access Savings Accounts?

Gain Exposure to Overnight Rates with ETFs

Banner Geldmarkt Overnight

What are Overnight ETFs?

Overnight ETFs aim to achieve a return that is based on the key overnight rate of a specific currency area. Overnight rates represent the average rate at which banks can lend money to each other on a daily basis[1]. They are based on the terms of actual overnight transactions, measuring the cost of overnight, unsecured borrowing. It is the near risk-free rate for the specific currency area, as it does not contain material term risk or bank credit risk, making it less volatile during periods of market stress. hese rates are usually calculated according to a fixed methodology[2] and published daily by the central banks of the respective currency area.

Xtrackers Overnight ETFs - efficient access to overnight interest rates

Explore our range of Xtrackers Overnight Rate Swap ETFs and learn more about their performance and trading opportunities.

EUR Overnight Rate Swap UCITS ETF 1CEUR Overnight Rate Swap UCITS ETF 1DGBP Overnight Rate Swap UCITS ETF 1DUSD Overnight Rate Swap UCITS ETF 1C
  • ISIN: LU0290358497
  • Region: Eurozone
  • TER: 0.10%
  • Income treatment: Capitalising
  • ISIN: LU0335044896
  • Region: Eurozone
  • TER: 0.10%
  • Income treatment: Distributing
  • ISIN: LU0321464652
  • Region: United Kingdom
  • TER: 0.10%
  • Income treatment: Distributing
  • Share class currency: GBP
  • ISIN: LU0321465469
  • Region: USA
  • TER: 0.10%
  • Income treatment: Capitalising
  • Share class currency: USD

Overnight ETFs, money market funds and easy access saving accounts – a comparison

Overnight ETFs provide exposure to central bank-determined interest rates, which are non-investable for most investors. For this reason, these interest rates are replicated synthetically within ETFs so investors can access them.

Xtrackers Overnight ETFs use a swap-based replication method, meaning they do not invest directly in the underlying assets. Instead, the ETF uses swaps with collateral to synthetically replicate the index performance. A swap is a contractual agreement between two parties – in this case, between the ETF and one or more banks. The swap counterparties are responsible for mapping the index and ensuring that its performance is mirrored as accurately as possible. This is the available approach to make overnight rates accessible.

Money market funds or easy access savings accounts can be alternatives to Overnight ETFs. Unlike ETFs, money market funds are actively managed and primarily invest in short-term instruments such as bank deposits, floating rate securities, and fixed-income securities with a short remaining maturity of a few months. Easy access savings accounts allow withdrawals, typically with notice periods from one calendar day to the next, and they can be subject to limits. Rates of easy access saving accounts can be variable, meaning they can go up or down over time.

The following table provides an overview of how the different investment options for short-term cash investments compare.

Investment optionEasy Access Savings AccountsMoney Market FundsOvernight ETFs
Impact of Interest Rate ChangesInterest rate increases are passed on with a delay (not updated daily) – no daily accrual of current interest ratesInterest rate changes are largely passed on to investors (already reflected in the price)Interest rate changes are passed on to investors (already reflected in the price)
Tradability / LiquidityBilateral agreement with bankPrice set daily by fund. Subscriptions and redemptions through fund provider only  Easily bought and sold at any time (also available as an ETF savings plan)
MaturityNo fixed maturityAs per EU regulations, the maturity must not exceed 397 daysMay also include securities with a maturity of more than one year. Market risks related to these securities are largely mitigated through swap transactions, which provide access to the current overnight interest rate.
RisksIssuer risk subject to Financial Services Compensations Scheme (FSCS) investor protectionInvestment in unsecured securities. Counterparty risk[3]
CostsUsually no additional costsTotal expense ratio (TER) of the money market fundAll-in fee or Total expense ratio (TER) of the ETF (currently 0.10%)

Investing in overnight interest rates with Xtrackers by DWS

While bank deposits often come with restrictions on both deposit amounts and investment horizons to qualify for the advertised interest rate, this is not the case with Overnight ETFs. There is no limit on the investment volume, and investors can trade an Overnight ETF on the exchange on a daily basis.
For example, the Xtrackers II GBP Overnight Rate Swap UCITS ETF replicates the performance of a deposit earning interest at the Sterling Overnight Index Average rate (SONIA[4]). Due to the very short maturity of one day, these instruments do not carry interest rate risk, unlike bonds with longer maturities. Generally, the longer the term of a bond the more the price of the bond will fluctuate when interest rates change.
With Overnight ETFs, returns are calculated based on SONIA minus the All-in fee (TER) of 0.10% as well as the ETF's trading costs. 

Xtrackers II EUR Overnight Rate Swap UCITS ETF 1C

(5 year performance)

Line chart with 1307 data points.
The chart has 1 X axis displaying categories.
The chart has 1 Y axis displaying values. Data ranges from 134.67 to 145.74.
End of interactive chart.

Xtrackers II GBP Overnight Rate Swap UCITS ETF 1D: Rolling performance data

 

 02/2015 - 02/201602/2016 - 02/201702/2017 - 02/201802/2018 - 02/201902/2019 - 02/202002/2020 - 02/202102/2021 - 02/202202/2022 - 02/202302/2023 - 02/202402/2024 - 02/2025
Total return (GBP)0.31%0.17%0.14%0.45%0.56%-0.07%-0.06%1.80%4.85%5.01%

 

Source: DWS International GmbH. As of March 21st,2025.  Past performance is not a reliable indicator of future performance.

Key overnight interest rates as the basis for Xtrackers Overnight ETF indices

British Pound

The SONIA rate is the key overnight benchmark rate in the United Kingdom. SONIA stands for Sterling Overnight Index Average. It represents the weighted average rate of unsecured overnight transactions with a minimum volume of £25 million, conducted between counterparties in London through member firms of the Wholesale Markets Brokers’ Association (WMBA)[5].

Euro

In the euro area, the Euro short-term rate (€STR) is the key reference for overnight interest rates. €STR stands for euro short-term rate, which is the official overnight rate calculated by the European Central Bank (ECB). The €STR is based on transaction data from the 30 banks with the highest trading volumes in Europe's money markets. These include primarily institutions from the eurozone, as well as international banks with a strong presence in the region. These banks report their relevant transactions daily to the ECB, which aggregates the data and calculates the official €STR[6].

US Dollar

In the United States, the Federal Funds Effective Rate serves as the key overnight interest rate. The Federal Funds Rate is set during meetings of the Federal Open Market Committee (FOMC). Depending on its agenda and prevailing economic conditions in the United States, FOMC members may raise, lower, or maintain the Federal Funds Rate at its current level.
The Federal Funds Effective Rate represents the weighted average overnight interest rate at which Federal Funds are effectively traded within a single day[7].

Risks

Interest rate risks in Overnight ETFs

Like other securities, ETFs are subject to various risks. The value of your investment may rise or fall, and past performance is not a reliable indicator of future results.

Investments linked to the overnight interest rate are exposed to price risk due to potential changes in the relevant rate. For example, if interest rates decrease, the expected annual return on the ETF would also decline. In contrast, bonds with longer maturities suffer from price losses when interest rates rise. A general rule of thumb applies: The longer the maturity, the greater the price fluctuations in response to changes in market interest rates.

Important notice: These funds are tied to interest rates that can be volatile. Interest rates respond to various economic, fiscal, monetary policy, and political factors.

Swap and derivatives[8] risk

A swap (a financial contract for exchanging cash flows) is an agreement between two parties—in this case, between an ETF and one or more banks. The bank(s) (swap counterparties) are responsible for replicating the index performance for the fund and delivering returns as accurately as possible.

Xtrackers Overnight ETFs invest only in bonds with high credit quality. In line with investment restrictions, the swap transactions and securities positions within the ETFs are regularly adjusted. Legally, the counterparty risk from the swap must be limited, meaning that the value of the swap transaction must not exceed ten percent of the fund’s assets. However, Xtrackers ETFs aim to keep swap exposure significantly lower, typically below five percent.

General risks of Xtrackers Overnight ETFs

The following risks may also be particularly relevant to the fund: credit risk, conflict of interest risk, disruption/adjustment risk, and risks associated with rules-based indices. A more detailed description of these risks, along with other general information, can be found in the risk section(s) of the prospectus. Investors may partially or entirely lose the capital invested in the fund. However, an investor’s risk is limited to the amount invested. This product does not provide protection against future market developments, meaning you may lose some or all of your invested capital.

Costs & fees

The price per share of a Xtrackers Overnight ETF rises or falls in line with the corresponding overnight interest rate, minus the published All-in fee. Within the index to which the ETFs are linked, all interest income is immediately reinvested and compounded. In the case of distributing ETFs, this interest income is paid out to investors.

1

In the UK, the Sterling Overnight Index Average (SONIA) is the benchmark rate for overnight unsecured transactions in the Sterling market. It reflects the average interest rates at which banks borrow sterling overnight. SONIA is administered and published by the Bank of England.

2

EUR-Lex - 32017R1131 - DE - EUR-Lex (europa.eu)

3

The fund may enter into one or more derivatives with one or more counterparties. If any of the counterparties fails to make payments (for example, it becomes insolvent) this may result in your investment suffering a loss.

4

An example of how SONIA is calculated can be found hier

5

Source: Bank of England

6

Source: European Central Bank

7

Source: Federal Reserve Bank of New York

8

The financial contract (known as a derivative) used to gain exposure to the index.