DWS launches two new actively managed ESG ETFs

DWS is expanding its Xtrackers ESG product universe with two actively managed ETFs, each of which invests globally in large or small cap stocks from developed economies: The Xtrackers World Green Transition Innovators UCITS ETF 1C (ISIN: LU2859392081) and the Xtrackers World Small Cap Green Transition Innovators UCITS ETF (ISIN: LU2859297330). They enable investors to invest in companies that are characterized by a high level of research and development activities in the field of green technologies, as documented by their respective patent portfolios. The two ETFs were listed on the German Stock Exchange on December 6, 2024. A listing on the London Stock Exchange is planned for December 13.

The transformation of the economy towards climate neutrality and resource conservation continues to be a key sustainability goal of the United Nations (UN) and the European Union (EU). The two Xtrackers Green Transition Innovators (GTI) UCITS ETFs offer an innovative, forward-looking approach to selecting companies that are particularly innovative in the green transition.

"The Xtrackers World Green Transition Innovators ETFs are of interest to investors looking to add an innovation-oriented, green technology-focused component to their portfolios," said Michael Mohr, Global Head of Xtrackers Product at DWS .

Objective and transparent patent data has proven to be useful for assessing the innovative strength of companies. The allocation of patents to defined Environmentally Sound Technologies (EST) is standardized by the World Patent Organization. Patent activity can be seen as an indicator of above-average excess returns and earnings growth. Studies have established a correlation between the number of patents granted and value growth in the past.[1]

DWS has commissioned Index Capital GmbH as allocation agent to provide investment advice on the composition of the equity portfolio of the two new funds. Index Capital specializes in the development and application of scientifically based concepts for the management of securities portfolios. Managing Director Andreas Beck said: "International sustainability goals can only be achieved through innovation. The two Green Transition Innovators ETFs follow this market-based logic"

The patent databases are currently being analyzed for Index Capital GmbH by Quant IP GmbH. The data is based on the IPC Green Inventory of the World Intellectual Property Organization, which provides access to patent information on environmentally friendly technologies. "Our evaluations of the global patent databases enable the Green Transition Innovators ETFs to achieve a new quality standard in terms of data depth, objectivity and transparency in sustainable investments," said Managing Director Lucas von Reuss.

The Xtrackers World Green Transition Innovators UCITS ETF invests in around 200 leading companies from various sectors worldwide. The largest individual stocks currently include Microsoft and Nvidia , each with a weighting of around eight percent in the ETF.[2] In addition to technology stocks, the ETF invests in financial service providers, healthcare stocks and retail stocks, among others.

The Xtrackers World Small Cap Green Transition Innovators UCITS ETF invests in around 200 leading companies from various sectors with small and medium market capitalization worldwide. The largest stocks are currently Guardant Health Inc (3.8% weighting), Lyft Inc (2.7%) and Puma SE (2.5%)[3]. The largest sectors are industrials, information technology, consumer staples and healthcare. The sectors and individual companies in both ETFs are weighted according to market capitalization, which makes the ETFs suitable as core investments that track the performance of the broad equity market.

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