“I think you’ll see ESG becoming increasingly important to U.S. investors,” said Bassett. “You can already see this taking place with the dialogue that is happening across the institutional and retail spectrum.”
Related: Thematic ETFs and Nursery Rhymes: Good for the Goose, Good for the Gander
Furthermore, while ESG ETFs are still vying for market share in the ETF space, it appears to be progressing with the advent of new products meeting demand. In fact, sustainability is one DWS’s four core values, not only from an investment perspective, but also as a financial market participant.
A Best-in-Class Approach
USSG is an expansion of the Xtrackers suite of ESG ETFs, which also includes the Xtrackers MSCI ACWI ex USA ESG Leaders Equity ETF (NYSE Arca: ACSG), the Xtrackers MSCI Emerging Markets ESG Leaders Equity ETF (NYSE Arca: EMSG) and the Xtrackers MSCI EAFE ESG Leaders Equity ETF (NYSEArca: EASG).
USSG seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI USA ESG Leaders Index. In order for companies to be included in the fund, the methodology includes a comprehensive screener that filters out alcohol, weapons, gambling, and other controversial products or activities.
Next, an ESG rating is applied that assesses risk and opportunities in order to select companies that will eventually be part of a ranking process. From here, only the top companies with the best ESG ratings are selected by sector.
“The methodology is a best-in-class approach that seeks to invest in companies with the highest ESG ratings in each sector while maintaining sector neutrality,” said Bassett.
“One of the benefits of this is that it brings transparency to the industry around the ESG topic,” added Bassett.
For more market trends, visit ETF Trends.