DWS has unveiled a seven-strong range of ETFs targeting the United Nation’s Sustainable Development Goals (SDGs), ETF Stream can reveal.
Three of the ETFs, targeting circular economy, sustainable cities and infrastructure, have listed on the Deutsche Boerse today and will be followed by listings on the London Stock Exchange and the SIX Swiss Exchange tomorrow.
The remaining four ETFs, which target three single SDGs as well as a diversified global SDG strategy, are planned to list within the next few weeks. All seven ETFs track MSCI indices and have total expense ratios (TERs) of 0.35%.
The SDG range comprises of:
Xtrackers MSCI Global SDGs UCITS ETF (XDGI)
Xtrackers MSCI Global SDG 3 Good Health UCITS ETF (XDG3)
Xtrackers MSCI Global SDG 6 Clean Water & Sanitation UCITS ETF (XDG6)
Xtrackers MSCI Global SDG 7 Affordable and Clean Energy UCITS ETF (XDG7)
Xtrackers MSCI Global SDG 9 Industry, Innovation & Infrastructure UCITS ETF (XDG9)
Xtrackers MSCI Global SDG 11 Sustainable Cities UCITS ETF (XG11)
Xtrackers MSCI Global SDG 12 Circular Economy UCITS ETF (XG12)
Speaking to ETF Stream, Olivier Souliac (pictured), senior Xtrackers product specialist at DWS, said the six single SDGs were chosen based on MSCI’s sustainable impact revenue metrics and its thematic mapping methodology.
Sustainable revenue will account for 75% of the indices while the forward-looking thematic metrics – covering companies that are not yet hitting revenue targets but that are expected to grow – will make up the remaining 25%.
The six single SDGs will track roughly “60-100” companies while XDGI, which applies the same metrics to the MSCI All Country World index will track over 200 stocks.
“The idea was to develop a thematic ESG range by looking at the data that underlines the 17 SDGs,” Souliac said. “We wanted to focus on those SDGs that present a growth story in the sense that companies can make meaningful revenue and therefore a meaningful contribution to those SDGs.
“We will not be offering all 17 SDGs as ETFs. The reason we have a revenue-based approach is that some of the SDGs such as zero hunger and education can only really be filled by society and governments and are not themes in the sense of being growth stories.”
Despite this, Souliac added DWS would look to expand the range should companies’ reporting of ESG data improve.
“SDGs are a real opportunity to be part of the transformation of companies and society that is much needed. The SDGs run until 2030 and regulators and governments are gearing capital via regulation towards these goals,” he said.
“We think it is a nice way for investors to position themselves in this area.”
All seven ETFs will be labelled Article 8 under the Sustainable Finance Disclosure Regulation (SFDR).