German asset manager DWS Group launched Wednesday a trio of exchange-traded funds that tap into growing demand for environmental, social and governance investing.
The new funds expand the company’s existing ESG lineup to 13 ETFs with $4 billion in assets under management. The additions include the Xtrackers S&P ESG Dividend Aristocrats ETF (SNPD), the Xtrackers S&P 500 Growth ESG ETF (SNPG) and the Xtrackers S&P 500 Value ESG ETF (SNPV). All three list on the Chicago Board Options Exchange.
“These new funds can meet the need of investors seeking competitively priced core building blocks of a portfolio that also incorporate ESG investment considerations,” Amanda Rebello, head of passive sales in the U.S. at DWS, wrote in an email to ETF.com.
ESG has become a polarizing topic in recent months as politicians, asset managers and investors debate the effectiveness of the strategy. Despite accelerating pushback against sustainable investing, recent studies have demonstrated significant investment returns for ESG products.
Rebello added that though sustainable investments don’t always prioritize returns, ESG data can provide asset managers with insights into off-balance-sheet risks, while also encouraging them to invest in securities whose issuers are more aligned with sustainable initiatives, such as carbon reduction.
A 2022 report published by PwC found that demand for ESG products is soaring. Growth in the sector is expected to outpace the asset and wealth management market as a whole, with ESG AUM in the U.S. likely to double to $10.5 trillion by 2026.
In fact, 60% of the U.S. institutional investors surveyed reported that ESG has already resulted in higher yields in their investment performance, compared with non-ESG equivalents.
Frankfurt-based DWS Group, which manages $834 billion in assets, said the new ETFs all track the performance of an S&P index. SNPD tracks the S&P ESH High Yield Dividend Aristocrats Index, SNPG follows the S&P 500 Growth ESG Index and SNPV tracks the S&P 500 Value ESG Index. All three indexes provide exposure to companies with either high ESG performance or those that meet certain ESG criteria.
The ETFs compete in the same arena as other ESG-focused funds such as the Thrivent Small-Mid Cap ESG ETF (TSME) and the Vanguard ESG U.S. Stock ETF (ESGV), among others, including DWS’ own Xtrackers MSCI USA ESG Leaders Equity ETF (USSG).
All three ETFs—SNPD, SNPG and SNPV—come with expense ratios of 0.15%.
Contact Zoya Mirza at [email protected]