Exchange traded funds focused on environmental, social and governance (ESG) investing principles are growing at a modest clip, but that's enough to encourage issuers to bring more of these products to market.
Deutsche Bank's DWS Group did just that Thursday, adding two ETFs to its ESG lineup.
What Happened
The Xtrackers MSCI ACWI ex USA ESG Leaders Equity ETF ACSG and the Xtrackers MSCI Emerging Markets ESG Leaders Equity ETF EMSG are DWS's newest ESG funds.
The Xtrackers MSCI ACWI ex USA ESG Leaders Equity ETF tracks MSCI ACWI ex USA ESG Leaders Index. Index provider MSCI assigns companies in ESG benchmarks with grades ranging from AAA to CCC.
“Over 170 ESG analysts review 6,500 companies using 1,000 data points and 14 years of shareholder meeting results to assess how well companies manage ESG risks and opportunities,” according to DWS.
The MSCI ACWI ex USA ESG Leaders Index is cap-weighted and is home to nearly 900 stocks, over 23 percent of which are financial services names. Technology and industrial stocks combine for 24 percent of the benchmark's weight. Japan and the U.K. combine for almost a quarter of the index's geographic exposure.
ACSG charges 0.16 percent per year, or $16 on a $10,000 investment.
Why It's Important
The Xtrackers MSCI Emerging Markets ESG Leaders Equity ETF follows the MSCI Emerging Markets ESG Leaders Index. That index includes large- and mid-cap stocks from 24 developing economies and has 405 components.
EMSG's underlying index allocates almost 55 percent of its combined weight to the technology and financial services sectors. China and Taiwan combined for 36.60 percent of the index's geographic exposure.
EMSG charges 0.20 percent per year, or $20 on a $10,000 position.
What's Next
ACSG and EMSG join the Xtrackers MSCI EAFE ESG Leaders Equity ETF EASG in the DWS ESG suite. EASG debuted in September.
ESG ETFs have added $1.6 billion in new assets this year, good for 26 percent organic growth, according to Bloomberg's Eric Balchunas.
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