Xtrackers by DWS creates ESG 0-5 year USD Corporate Bond ETF
- Replacement of index on existing USD corporate bond ETF creates new product with ESG characteristics
- Fee reduction to create a competitively priced ESG ETF on short duration USD corporate bonds
Xtrackers by DWS has created a new offering with an exchange traded fund (ETF) providing environmental, social and governance (ESG) derived exposure to short duration US dollar investment-grade corporate bonds.
Xtrackers ESG USD Corporate Bond Short Duration UCITS ETF tracks the Bloomberg MSCI USD Corporate Sustainable and SRI 0-5 Years Index, which reflects the performance of over 1,000 investment-grade, US dollar-denominated, short-duration corporate bonds (with at least one month and up to but not including five years to maturity) excluding securities which do not fulfil specific ESG criteria.
It has an indicative yield to maturity of around 2.11% and modified duration of 2.4 years (Source: BlackRock Aladdin, as of February 15, 2022). The index implements strict ESG filters in line with MSCI's SRI (socially responsible investing) methodology, thereby excluding companies that are rated BB or below by MSCI ESG Research, issuers with an MSCI ESG Controversies score of less than one, those classified as breaching certain thresholds in controversial activities, and companies that have involvement in the defence sector. This leads to the removal of approximately 30% of issuers from the original index (Source: Bloomberg, as of February 1, 2022).
The ETF was created by replacing the index of the existing Xtrackers iBoxx USD Corporate Bond Yield Plus UCITS ETF. The index change also sees a reduction in the ETF's annual all-in fee from 0.25% to 0.16% per annum. The fund currency is USD and there is also a EUR-hedged variant (the annual all-in fee for the EUR-hedged share class is 0.21%).
"Investors can now access high quality short duration ESG USD corporate bond exposure via a competitively priced Xtrackers ETF. We're pleased to expand our ESG product suite further to meet that demand with this exposure. The addition of ESG filters creates a quality bias, helping improve the product’s risk profile at a moderate cost to yield," said Michael Mohr, Head of Passive Products, DWS.
| Previous fund name | New fund name | Previous reference index | New reference index |
|---|---|---|---|
| Xtrackers iBoxx USD Corporate Bond Yield Plus UCITS ETF | Xtrackers ESG USD Corporate Bond Short Duration UCITS ETF | Markit iBoxx USD Corporates 1-20 Yield Plus Index | Bloomberg MSCI USD Corporate Sustainable and SRI 0-5 Years Index |
| Share class | ISIN | Annual All-in Fee per annum |
|---|---|---|
| 1D | Xtrackers USD Corporate Bond Short Duration SRI PAB UCITS ETF 1D ESG | 0.16% |
| 2C - EUR Hedged | LongNameSCIcon | 0.21% |
About DWS Group
DWS Group (DWS) is one of the world's leading asset managers with EUR 928bn of assets under management (as of 31 December 2021). Building on more than 60 years of experience, it has a reputation for excellence in Germany, Europe, the Americas and Asia. DWS is recognised 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 asset classes and 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 Chief Investment Office (CIO View), which guides our investment approach strategically.
DWS wants to innovate and shape the future of investing: with approximately 3,600 employees in offices all over the world, we are local while being one global team. We are investors – entrusted to build the best foundation for our clients’ future.
Key risks
- Investors should note that the Xtrackers UCITS ETFs and ETCs 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.
- Investments in ETC securities will not accrue any interest and performance is subject to the deduction of the product fee.
- Pricing of the ETC securities on the secondary market may be at a significant discount or premium compared to the Value per ETC Security (intrinsic value) published by the Issuer. Investments in Xtrackers ETCs involve numerous risks including but not limited to, general market risks relating to the relevant commodities, exchange rate risks, interest rate risks, inflationary risks, liquidity risks, and legal and regulatory risks.
- 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.
Important Notice
This press release has been issued in the UK and approved by DWS Investments UK Limited. DWS Investments UK Limited is authorised and regulated by the Financial Conduct Authority. Any reference to “DWS” shall, unless otherwise required by the context, be understood as a reference to DWS Investments UK Limited including any of its parent companies, any of its or its parents affiliates or subsidiaries and, as the case may be, any investment companies promoted or managed by any of those entities.
Past performance is not a guide for future returns.
Xtrackers UCITS ETFs are all ETFs of one of the following platforms: Xtrackers, Xtrackers II or Xtrackers (IE) plc.
Xtrackers, Xtrackers II and Xtrackers (IE) plc are undertakings for collective investment in transferable securities (UCITS) in accordance with the applicable laws and regulations and set up as open-ended investment companies with variable capital and segregated liability between their respective compartments.
Xtrackers and Xtrackers II are incorporated in the Grand Duchy of Luxembourg, are registered with the Luxembourg Trade and Companies’ Register under number B-119.899 (Xtrackers) and B-124.284 (Xtrackers II) respectively and have their registered office at 49, avenue J.F. Kennedy, L-1855 Luxembourg. Xtrackers (IE) plc is incorporated in Ireland with registered number 393802 and has its registered office at 78 Sir John Rogerson’s Quay, Dublin 2, Ireland. DWS Investment S.A. acts as the management company of Xtrackers, Xtrackers II and Xtrackers (IE) plc.
This information is intended for informational purposes only and does not constitute investment advice, recommendation, an offer or solicitation. Any investment decision in relation to an Xtrackers ETF should be based solely on the latest version of the prospectus, the audited annual and, if more recent, un-audited semi-annual reports and the Key Investor Information Document (KIID), all of which are available in English upon request or on www.Xtrackers.com. In the case of any inconsistency with the prospectus, the latest version of the prospectus shall prevail.
© DWS Investments UK Limited 2022.