German investment giant Deka has launched a socially responsible thematic equity ETF targeting companies facilitating the transition to sustainable energy.
Deka has introduced a thematic ETF focused on companies facilitating the energy transition.
The Deka Future Energy ESG UCITS ETF (D6RD GY) has been listed on Deutsche Börse Xetra in euros.
The fund is linked to the Solactive Future Energy ESG Index which selects its constituents from a universe of large and mid-cap stocks from developed markets, as well as Hong Kong and US listings of China-domiciled firms.
The methodology first screens out violators of global norms, companies involved in controversial weapons or tobacco, and firms deriving significant revenue from weapons, coal, nuclear power, and oil & gas.
Additionally, companies with excessively high energy consumption or carbon emissions relative to their revenues are also excluded from the selection pool.
Security selection is then driven by Solactive’s proprietary natural language processing algorithm, called ARTIS, which identifies firms linked to a specific theme by screening publicly available information such as financial news, business profiles, and company publications for appropriate keywords.
With reference to the future energy theme, the algorithm is programmed to identify companies with significant exposure to solar energy, wind energy, geothermal energy, battery & energy storage, hydrogen power, and smart energy & alternative power subthemes.
The index selects the 60 companies with the highest ARTIS scores. Constituents are weighted using an equally weighted combination of their float-adjusted market capitalization and their ARTIS ranks subject to an individual security cap of 5%. Rebalancing occurs on a semi-annual basis.
As of the end of June, stocks from the US accounted for a little over a third (36.0%) of the total index weight with the next-largest country exposures being Canada (16.2%) and Japan (9.6%).
Notable positions included Enphase Energy (6.3%), Daqo New Energy (4.0%), Orsted (3.9%), Algonquin Power & Utilities (3.5%), and First Solar (3.4%).
The ETF comes with an expense ratio of 0.55% and is classified as an Article 8 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).