While environmental, social and governance (ESG) exchange-traded funds (ETFs) are still vying for market share in the ETF space, it appears to be progressing with the advent of new products meeting demand. For instance, DWS Group announced on Thursday that it’s bolstering its U.S. suite of ESG ETFs with the launch of Xtrackers MSCI ACWI ex USA ESG Leaders Equity ETF (NYSEArca: ACSG) and Xtrackers MSCI Emerging Markets ESG Leaders Equity ETF (NYSEArca: EMSG).
ACSG and EMSG provide exposure to companies with high ESG rating, as deemed by MSCI, relative to their sector peers in developed countries and emerging market countries ex U.S., and in emerging markets, respectively. MSCI assesses each company in its ESG Leaders indexes on its corporate governance, as well as management of ESG risks and opportunities, and assigns a rating between AAA-CCC.
“Although ESG investing has recently become a larger and fast-growing market segment, environmental, social and governance factors have been part of DWS’s core DNA for more than 20 years,” said Fiona Bassett, Global Co-Head of Passive Asset Management and Global Co-Head of Products. “Our goal is to provide investors with solutions that allow them to invest along with their values while also ensuring cost-efficient access to markets. Our newly launched Xtrackers suite of MSCI ESG Leaders ETFs employ a transparent approach in a market looking to define ESG standards and benchmarks.”
The announcement of the news comes after the launch of Xtrackers MSCI EAFE ESG Leaders Equity ETF (NYSE Arca: EASG) in September. EASG provides investors further transparency into ESG related company performance beyond traditional financial analysis and will allow them to efficiently invest in high ESG rating companies located in developed markets outside the U.S. and Canada.
The ACSG and EMSG funds seek investment results that correspond generally to the performance, before fees and expenses, of the MSCI ACWI ex USA ESG Leaders Index and the MSCI Emerging Markets ESG Leaders Index, respectively. MSCI ESG rating methodology evaluates corporate governance, focusing on the most relevant ESG factors by industry and risk exposure, to identify ESG leaders and laggards within in each industry.