Socially Responsible ETF Debuts At Low Cost

Today DWS Group has launched another addition to its socially responsible equity ETF lineup. The Xtrackers MSCI USA ESG Leaders Equity ETF (USSG) rounds out a global family of ETFs covering developed and emerging markets.

USSG comes with an expense ratio of 0.10% and lists on the NYSE Arca.

Methodology

MSCI’s ESG Leaders methodology scores companies based on environmental, social and governance (ESG) standards, and selects the stocks with the highest scores until the index represents half of the market capitalization of the parent index, which essentially results in the index holding only top-tier ESG companies. From there, the methodology adjusts the sector (and country) weights so they reflect those of the parent index.

“This latest expansion in our ESG offering will provide investors the opportunity to get exposure to the U.S. market while ensuring they invest in companies with the highest ESG performance, and to do so at a highly competitive price point,” said Fiona Bassett, DWS Group global co-head of passive asset management and global co-head of product.

“Our aim is to be the partner of choice for our clients, and to develop and provide solutions that allow them to fulfil their financial objectives in a way that’s aligned with their core values,” she added.

Bigger Picture

DWS already has three ETFs in its family, and all have low expense ratios, similar to the rock-bottom pricing offered by USSG. Those ETFs are as follows:

• Xtrackers MSCI ACWI ex U.S.A. ESG Leaders Equity ETF (ACSG), 0.16%
• Xtrackers MSCI EAFE ESG Leaders Equity ETF (EASG), 0.14%
• Xtrackers MSCI Emerging Markets ESG Leaders Equity ETF (EMSG), 0.20%

USSG’s expense ratio makes it the cheapest socially responsible U.S. equity ETF, beating even the Vanguard ESG U.S. Stock ETF (ESGV), priced at 0.12%. The other Xtrackers using the MSCI ESG Leaders methodology are also the cheapest among their peer groups.

Perhaps most interesting about the launch of USSG is that Finnish mutual pension insurance company Ilmarinen is using the fund in its own strategies, and collaborated with DWS Group in its development. The insurer uses the MSCI US ESG Leaders as its benchmark.

Contact Heather Bell at [email protected]