DWS has introduced a new suite of equity ETFs in Europe combining high dividend yields with environmental, social, and governance (ESG) considerations.
DWS has introduced a new suite of high dividend ETFs aimed at ESG-conscious investors.
The four ETFs are linked to indices within the MSCI High Dividend Yield Low Carbon SRI Screened Select Index family that focus on different regional markets including global developed, US, European, and eurozone stock universes.
Listed on Deutsche Börse Xetra, they are the Xtrackers MSCI World High Dividend Yield ESG UCITS ETF, the Xtrackers MSCI Europe High Dividend Yield ESG UCITS ETF, the Xtrackers MSCI EMU High Dividend Yield ESG UCITS ETF, and the Xtrackers MSCI USA High Dividend Yield ESG UCITS ETF.
Each ETF comes with an expense ratio of 0.25% and is classified as an Article 8 product under the EU’s Sustainable Finance Disclosure Regulation (SFDR).
Methodology
Each index begins its construction from an initial universe comprising large and mid-cap stocks from its target region.
The methodology first removes companies that are violating international norms or are embroiled in severe ESG-related controversies as well as firms with very poor overall ESG profiles relative to their sector peers.
The exclusions also extend to firms involved in certain controversial industries including weapons, fossil fuel extraction, adult entertainment, tobacco, nuclear power, alcohol, and genetically modified organisms, among others.
From the remaining universe, each index selects and weights its constituents using an optimization-based approach that aims to maximize the overall dividend yield while satisfying several environmental objectives including a minimum 30% reduction in greenhouse gas intensity and a minimum 50% reduction in fossil fuel exposure.
The optimization further seeks the solution that best controls ex-ante tracking error relative to the initial universe by limiting deviations in geographical, sector, and constituent weights.