DWS has launched an Xtrackers ETF that provides access to large and mid-cap stocks listed on the Shanghai and Shenzhen stock exchanges, the ‘A-shares’ segment of the market that accounts for the majority of Chinese equity market capitalisation.
Simon Klein, Global Head of Passive Sales, DWS
- Xtrackers MSCI China A ESG Screened Swap UCITS ETF tracks performance of China’s domestic equity market
- Based on an index that excludes companies that do not fulfil certain ESG characteristics
- DWS manages around €4.5 billion in Xtrackers ETFs tracking the Chinese equity market
The Xtrackers MSCI China A ESG Screened Swap UCITS ETF has been listed on the Deutsche Börse and the London Stock Exchange. Listings on other European exchanges are planned.
The ETF tracks the MSCI China A Inclusion Select ESG Screened Index. This is an ESG screened version of the MSCI China A Inclusion Index, which provides exposure to the A-shares segment of the MSCI China Index. The largest sectors in the MSCI China A Inclusion Select ESG Screened Index are financials (19.1% index weight), consumer discretionary (15.5%) and industrials (14.4%). The share of the largest ten positions in the index, which currently comprises 363 stocks, is 19 per cent (Source: MSCI, May 31, 2022).
The ESG Screened methodology leads to the exclusion of around a quarter of the index members of the MSCI China A Inclusion Index. For example, the stocks of companies that are associated with controversial or nuclear weapons, or that generate more than five percent of their revenues from conventional weapons, tobacco or the extraction of hard coal and oil sands are filtered out. Furthermore, stocks that have received an MSCI ESG rating of ‘CCC’ or that do not comply with the principles of the United Nations Global Compact are removed from the index. The ETF meets the requirement to be classified as a product under Article 8 of the EU Disclosure Regulation.
With the addition of Xtrackers MSCI China A ESG Screened Swap UCITS ETF, DWS now has eight ETFs covering segments of China’s equity market, representing assets under management of around EUR 4.5 billion (Source: DWS as of June 24, 2022). By comparison, assets under management in Xtrackers ETFs on Chinese equity indices amounted to EUR 2.2 billion at the end of 2019.
“China’s A-shares market is still significantly under-represented in many portfolios relative to its importance and growth prospects. The MSCI China A ESG Screened Swap UCITS ETF provides efficient and liquid access to the domestic A-shares market while taking into account fundamental sustainability characteristics,” says Simon Klein, Global Head of Passive Sales, DWS.
| ETF name | ISIN | China Equity segment | Annual All-in Fee (%) | AuM in EUR (Millions) |
| Xtrackers MSCI China A ESG Screened Swap UCITS ETF | LU2469465822 | A-shares | 0.29 | 5.13 |
| Xtrackers CSI 300 Swap UCITS ETF | LU0779800910 | A-shares | 0.50 | 2,050.91 |
| Xtrackers Harvest CSI300 UCITS ETF | LU0875160326 | A-shares | 0.65 | 534.07 |
| Xtrackers Harvest FTSE China A-H 50 UCITS ETF | LU1310477036 | A-shares, H-shares | 0.65 | 12.35 |
| Xtrackers FTSE China 50 UCITS ETF | LU0292109856 | H-shares | 0.60 | 121.4 |
| Xtrackers Harvest MSCI China Tech 100 UCITS ETF | LU2376679564 | A-shares, H-shares, international | 0.44 | 17.77 |
| Xtrackers MSCI China UCITS ETF | LU0514695690 | A-shares, H-shares, international | 0.65 | 1,879.63 |
| Xtrackers MSCI China UCITS ETF | LU2456436083 | A-shares, H-shares, international | 0.30 | 7.38 |
Xtrackers ESG EUR High Yield Corporate Bond UCITS ETF
The fund is passively managed. The aim is for your investment to reflect the performance of the Bloomberg MSCI Euro High Yield Sustainable and SRI Index. The index aims to reflect the performance of Euro-denominated, high yield, fixed-rate corporate bonds, excluding bonds which do not fulfil specific environmental, social and governance (ESG) criteria. The bonds must have a fixed rate of interest, must be rated less than Ba1/BB+ by major rating agencies and meet certain currency, sector, amount outstanding, credit quality, maturity, coupon, seniority of debt, market of issue, and security type criteria. Bonds rated below BB by MSCI ESG Research are excluded. Issuers with a “red” MSCI ESG Controversies score (less than 1) and issuers that are classified by MSCI in their MSCI ESG Business Involvement Screening Research (BISR) as breaching certain thresholds in controversial activities are also excluded from the index. At least 20% of issuers will be excluded from the original universe using the ESG criteria.
Issuers with MSCI ESG Ratings of BBB or higher will be weighted in the index at 100% weight by market value while the weight of bonds from issuers with MSCI ESG Ratings of BB will be weighted in the index at a 50% weight by market value. The weight of each issuer is limited to 3%. Any excess weight over the 3% cap will be redistributed on a pro rata basis to all other issuers’ bonds below the 3% cap. The composition of the index is rebalanced monthly.
The index is administered by Bloomberg Index Services Limited.
The index is calculated on a total return basis which means that the payments from coupons are reinvested in the index. To achieve the aim, the fund will attempt to replicate the index, before fees and expenses, by buying a portfolio of securities that may comprise the constituents of the index or other unrelated investments as determined by DWS entities. The fund may employ techniques and instruments in order to manage risk, reduce costs and improve results. These techniques and instruments may include the use of derivatives. The currency of the fund is EUR. Returns and gains are not distributed but are reinvested in the fund.
Name : Xtrackers ESG EUR High Yield Corporate Bond UCITS ETF
ISIN : IE0006GNB732
Sedol : BMHYP03
Currency : EUR
T.E.R. : 0.15%
Index: Bloomberg MSCI Euro High Yield Sustainable and SRI Index
Source: ETFWorld.co.uk
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