DWS announced today the listing of a new exchange traded fund, the Xtrackers US National Critical Technologies ETF (NYSE Arca: CRTC). The ETF tracks large and midcap companies that support critical emerging technologies across the U.S. and its allies.
CRTC selects companies from developed markets that satisfy criteria related to critical technology sectors and geopolitical risk ratings. It seeks to track the performance, before fees and expenses, of the Solactive Whitney U.S. Critical Technologies Index. The underlying index’s investment universe is derived from the Solactive GBS Developed Markets Large & Mid Cap USD Index.
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Companies are screened for ties to 14 key tech areas the Department of Defense deems crucial for U.S. national security. These technologies range from biotechnology and quantum science to microelectronics and renewable energy.
Then, the screening process assigns a “geostrategic risk rating score” to each company that passes the critical technology screen. This score quantifies the relative level of risk that it may face through geopolitical activities. These activities may include economic sanctions, national industrial policy actions, or national regulatory actions. It may also include other economic strategic competition actions taken by the U.S. and adversarial nations.
Exposure to Strategically Important Technologies
Arne Noack, head of systematic investment strategies, Americas at DWS, emphasized technology’s pivotal role in economic competitiveness, citing advancements in infrastructure. He added that CRTC “leverages a geostrategic risk rating that evaluates risks on different levels. This will provide investors with exposure to sectors and companies aligned to technologies of strategic importance.”
Noack also noted that DWS designed the fund to “fortify… investments against certain geostrategic interdependencies.”
The ETF’s underlying index consisted of 242 companies as of October 31. Its biggest components were Alphabet, Microsoft, Exxon Mobil, Chevron, Merck & Co., and Abbvie. CRTC charges 35 basis points.
The addition of the fund expands the Xtrackers U.S. product suite to 44 funds. Including CRTC, Xtrackers by DWS has launched six ETFs since January 2023. This latest fund is the fourth product in the Xtrackers U.S. thematic suite.
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