Industry Updates

DWS adds ESG screen to DAX income ETF

The new index will use ESG data from the Institutional Shareholder Service

Theo Andrew

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DWS is planning on adding an ESG screen to its DAX income ETF as demand continues to grow for sustainable products.

In a shareholder notice, DWS said it would be swapping the index on its Xtrackers DAX Income UCITS ETF (XDDX) from the DAX index to the DAX ESG Screened index.

Following the changes, XDDX will see its name changed to the Xtrackers DAX Income ESG Screened UCITS ETF under the same ticker and total expense ratio of 0.09%.

Proxy advisory service Institutional Shareholder Services (ISS) will be responsible for providing the data for the index, excluding companies that do not meet specific ESG criteria.

Those assigned an ISS ESG rating of D- or below or marked red by the data provider will be excluded.

Companies will be assessed based on their adherence to human rights, labour standards, environmental protection and anti-corruption, established by the United Nations Global Compact and the OECD.

Those identified to be involved in controversial weapons or that breach revenue thresholds in business activities including tobacco, thermal coal mining, oil sands, nuclear power, civilian firearms and military equipment will also be excluded.

The ETFs will be labelled Article 8 under the Sustainable Finance Disclosure Regulation (SFDR).

Furthermore, the index will switch from being a price return index to a total return index, which means performance will be calculated based on dividends or distributions that are reinvested.

DWS said: “The change to the new reference Index is proposed as part of the company’s continuous review of its existing product range and due to increased demand for ESG compliant investments.

“Hence, the board of directors deems it to be in the best interests of the shareholders to restructure the ETF to reflect the new reference index.”

DWS said it would continue the securities lending programme on XDDX, adding it will amend the product prospectus to ensure the transactions will comply with its ESG standards and the minimum ESG screens of the index.

Earlier this month, the German asset manager said it would be switching the indices on its £245m Xtrackers MSCI Canada UCITS ETF (XCAN) and the £314m Xtrackers MSCI Pacific ex Japan UCITS ETF (XPXJ).

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