New Xtrackers ETFs from DWS reduce investment risks caused by the loss of biodiversity
- ETFs invest in companies that have a lower negative impact on biodiversity than average and that take the UN's SDGs into account
- Multi-stage process filters out companies that harm biodiversity, among other aspects, and reduces the portfolio's CO2 intensity by 50 per cent
- ETFs track the global equity market as well as the US and European regions
DWS is expanding its range of sustainable investment products with three new Xtrackers ETFs. The listed index funds offer investors the opportunity to invest in companies in Europe, the US and worldwide that have a lower negative impact on the earth's ecosystems than the market average. The Xtrackers Biodiversity Focus SRI UCITS ETFs for the US investment region and the global equity market were listed on the London Stock Exchange today, following the listing of all three ETFs on the Frankfurt Stock Exchange on 3 November.
Biodiversity, the diversity of life on earth, is of great importance not only from an ecological but also from an economic perspective. Studies estimate the global value of ecosystem services - i.e. the benefits that people derive from nature - at between USD 125 and 140 trillion per year. The World Economic Forum predicts that the loss of biodiversity will have the third largest negative impact on humanity in the next ten years after climate change and extreme weather.
DWS now enables investors to integrate the aspect of biodiversity into their portfolios easily and cost-effectively via ETFs. Specifically, the products track different variants of the ISS STOXX Biodiversity Focus SRI indices. When compiling these indices from a sustainability perspective, additional risks associated with biodiversity are identified and subsequently reduced. They therefore represent an extension of existing ESG indices that take into account environmental, social and governance criteria.
A multi-stage filter is used for each biodiversity index. Firstly, companies whose activities are demonstrably detrimental to biodiversity are excluded from the respective investment universe. These are, for example, producers of palm oil, genetically modified agricultural goods or hazardous pesticides. In the subsequent screening according to the ISS ESG Biodiversity Impact Assessment Tool (BIAT), those companies are identified and excluded that have the strongest negative impact on biodiversity within an economic sector. The biodiversity and climate-related development goals of the United Nations (Social Development Goals; SDGs) are also taken into account in the selection process. Finally, a filter ensures that the CO2 intensity of the portfolio is reduced by at least 50 per cent compared to the broad market index. "With the Xtrackers Biodiversity ETFs, investors can transparently reduce the risks associated with the decline in biodiversity for their broadly diversified equity investments. This is an important addition to our range of sustainability-oriented investments," says Olivier Souliac, Head Indexing Xtrackers Products at DWS.
Product Table
| ETF name | Underlying Index | ISIN | Income treatment | Ticker | TER p.a. |
|---|---|---|---|---|---|
| Xtrackers World Biodiversity Focus SRI UCITS ETF 1C ESG | ISS STOXX Developed World Biodiversity Focus SRI Index | IE000E0V65D8 | accumulating | XBI0 | 0.30% |
| Xtrackers Europe Biodiversity Focus SRI UCITS ETF 1C ESG | ISS STOXX Europe 600 Biodiversity Focus SRI Index | IE000VMAR5O6 | accumulating | XBEE | 0.30% |
| Xtrackers USA Biodiversity Focus SRI UCITS ETF 1C ESG | ISS STOXX US Biodiversity Focus SRI Index | IE000LOSV2D0 | accumulating | XBUZ | 0.30% |
Key risks
- Investors should note that the Xtrackers UCITS ETFs are not capital protected or guaranteed and investors should be prepared and able to sustain losses of the capital invested up to a total loss.
- Shares in the Xtrackers UCITS ETFs which are purchased on the secondary market cannot usually be sold directly back to the relevant fund. Investors must purchase and redeem such shares on the secondary market with the assistance of an intermediary (e.g. a market maker or a stock broker) and may incur fees for doing so (as further described in the applicable prospectus). In addition, investors may pay more than the current net asset value of a share in a Xtrackers UCITS ETF when buying shares on the secondary market, and may receive less than the current net asset value when selling such shares on the secondary market.
- Investments in funds involve numerous risks including, among others, general market risks, credit risks, foreign exchange risks, interest rate risks and liquidity risks. The value of an investment in a Xtrackers UCITS ETF may go down as well as up and investors may not get back the full amount of their original investment.
- Movements in exchange rates can impact the value of your investment. If the currency of your country of residence is different from the currency in which the underlying investments of the fund are made, the value of your investment may increase or decrease subject to movements in exchange rates.
- For a full description of risk factors, please refer to the relevant prospectus.
About DWS Group
DWS Group (DWS) with EUR 860bn of assets under management (as of September 30, 2023) aspires to be one of the world's leading asset managers. Building on more than 60 years of experience, it has a reputation for excellence in Germany, Europe, the Americas and Asia. DWS is recognized by clients globally as a trusted source for integrated investment solutions, stability and innovation across a full spectrum of investment disciplines.
We offer individuals and institutions access to our strong investment capabilities across all major liquid and illiquid asset classes as well as solutions aligned to growth trends. Our diverse expertise in Active, Passive and Alternatives asset management – as well as our deep environmental, social and governance focus – complement each other when creating targeted solutions for our clients. Our expertise and on-the-ground knowledge of our economists, research analysts and investment professionals are brought together in one consistent global CIO View, giving strategic guidance to our investment approach.
DWS wants to innovate and shape the future of investing. We understand that, both as a corporate as well as a trusted advisor to our clients, we have a crucial role in helping navigate the transition to a more sustainable future. With approximately 3,800 employees in offices all over the world, we are local while being one global team. We are committed to acting on behalf of our clients and investing with their best interests at heart so that they can reach their financial goals, no matter what the future holds. With our entrepreneurial, collaborative spirit, we work every day to deliver outstanding investment results, in both good and challenging times to build the best foundation for our clients’ financial future.