DWS has expanded its fixed income ETF suite with the launch of a eurozone government green bond strategy.

The Xtrackers Eurozone Government Green Bond UCITS ETF (XGEZ) is listed on the Deutsche Boerse with a total expense ratio (TER) of 0.18%.

DWS said XGEZ will list on the London Stock Exchange later this week.

XGEZ will track the iBoxx EUR Eurozone Sovereign Green Bond Capped index which offers exposure to investment grade euro-denominated government green bonds with a remaining amount of at least €1bn.

The index uses external, independent data sources to determine “green bond” classification and only those classified by the Climate Bond Initiative will be included.

Furthermore, the index will only include bonds from issuers that are labelled “free” or “partly free” while all issuers with a severe sustainability country risk category will also be excluded from the index.

Currently, the index is 34.6% weighted to French green bonds, followed by German (24.5%) and the Netherlands (10.7%).

The ETF is labelled Article 9 under the Sustainable Financial Development Regulation (SFDR).

Simon Klein (pictured), global head of passive sales at DWS, previously said the group sees impact investing as one of the major future tasks for asset managers. 

The fleeting ‘greenium’ in ESG bonds

In July 2021, DWS launched two investment grade green bond ETFs, the Xtrackers EUR Corporate Green Bond UCITS ETF (XGBE) and Xtrackers USD Corporate Green Bond UCITS ETF (XGBU), seeded by Quintet Private Bank.

Earlier this month, DWS upgraded its corporate bond ETF from ‘light green’ to ‘dark green’ after its underlying index was changed to incorporate Paris-aligned benchmark (PAB) criteria.

The launch comes at a time when DWS’s ESG credentials continue to be questioned. Last week, a German consumer group said it was suing the asset manager for allegedly misleading sustainability claims in its advertising.

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