DWS Group Broadens ESG ETF Suite to Include IG, HY and EM Bonds | ETF Trends

DWS Group has broadened its ESG ETF suite to now include investment grade (IG), high yield (HY) and emerging markets (EM) bonds to round out its domestic and international equity offering, said Luke Oliver, Head of Index Investing for the Americas at DWS.

The changes became effective on Tuesday and include changes to the ETFs’ names, ticker symbols, underlying indexes, investment objectives and investment policies. In connection with these changes, the ETFs’ respective advisory fees have also been reduced. The changed, renamed ETFs are:

  • Xtrackers J.P. Morgan ESG Emerging Markets Sovereign ETF (Cboe BZX Exchange, Inc.: ESEB) (previously Xtrackers Emerging Markets Bond – Interest Rate Hedged ETF (EMIH)). ESEB seeks investment results that correspond generally to the performance, before fees and expenses, of the J.P. Morgan ESG EMBI Global Diversified Sovereign Index.
  • Xtrackers J.P. Morgan ESG USD High Yield Corporate Bond ETF (Cboe BZX Exchange, Inc.: ESHY) (previously Xtrackers High Yield Corporate Bond – Interest Rate Hedged ETF (HYIH)). ESHY seeks investment results that correspond generally to the performance, before fees and expenses, of the J.P. Morgan ESG DM Corporate High Yield USD Index.
  • Xtrackers Bloomberg Barclays US Investment Grade Corporate ESG ETF (Cboe BZX Exchange, Inc.: ESCR) (previously Xtrackers Investment Grade Bond – Interest Rate Hedged ETF (IGIH)). ESCR seeks investment results that correspond generally to the performance, before fees and expenses, of the Bloomberg Barclays MSCI US Corporate Sustainability SRI Sector/Credit/Maturity Neutral Index.

Oliver told ETF Trends that DWS Xtrackers now offer eight ESG ETFs that cover 70% of most model portfolio allocations, allowing all investors to now use ESG at the core of their portfolio.

“Our ESG ETFs, including our new fixed income suite provide core portfolio building blocks at core prices, being among the most cost efficient products in the market,” Oliver told ETF Trends. “ESG investing is central to the evolution of the investment landscape. As such, we’ve priced our ESG ETFs close to existing standard benchmark products so that we’ve lowered the hurdle for investors to adopt ESG.”

With a 25-year history in the responsible investing space, ESG is a key feature of DWS’ portfolio of products across active, passive and alternatives. Sustainable investing is an important growth area for DWS, and the firm is expanding sustainability-focused products across almost all of its asset classes tailored for both institutional and retail clients as part of its strategy.

Oliver said DWS Group believes ESG will become increasingly important for investors, especially as the Coronavirus pandemic brings greater attention to the investments needed to make the global economy, society and environment more sustainable.

“Sustainability has always been one of DWS’ core foundational values, and our growing Xtrackers ETF suite continues to deliver ESG solutions across core benchmarks, which can help align client portfolios with business models at the intersection of shareholder and stakeholder value creation,” he said.

With so much choice on the market, Oliver said investors looking to make allocations to ESG ETFs face a tough challenge when it comes to distinguishing between products and product providers.

“Investors are increasingly looking at the stewardship practices of asset managers when selecting which products to invest in, and DWS has a long track record of engaging with companies, including proxy voting, to foster positive environmental and social outcomes, such as tackling climate change,” he said.

The above-described ETF changes serve to bolster DWS’ ESG capabilities and the continued innovation of the Xtrackers fund family. In 2019, the firm launched two ESG ETFs, including the U.S. market’s first S&P 500 ESG ETF (SNPE), as well as one of largest ESG ETF by assets (USSG). In addition to ESEB, ESHY and ESCR, DWS currently manages more than $1.8 billion USD across six ESG ETF products, making it among the largest providers of ESG ETF products in the U.S.

DWS has long recognized the importance of ESG factors for investors. In 2007 the firm began integrating ESG screens into its investment process. In 2008, DWS was one of the first asset managers to adopt the United Nations Principles for Responsible Investment. In 2010 DWS co-founded the Urban Land Institute’s Green Print Center for Building Performance and committed to the White House Better Buildings Challenge. In 2013 DWS implemented international proxy voting guidelines. And in 2018 DWS incorporated the U.N. Sustainable Development Goals into its proprietary DWS ESG Engine.

For more information about DWS’s ETFs available in the U.S. or its commitment to ESG principles, visit: www.Xtrackers.com.