CRTC: Mitigate Portfolio Exposure to Growing Geopolitical Risks

IN A NUTSHELL

• The geostrategic threats now confronting the United States threaten our country’s global leadership. 
• The U.S. Department of Defense has identified 14 critical technologies that are essential to strengthening America’s national interests.
• The Xtrackers US National Critical Technologies ETF (CRTC) provides investors access to the companies driving and maintaining America’s technological dominance and protecting national security.
• CRTC employs a sophisticated geostrategic risk rating to screen out companies vulnerable to high-risk nations.

Global Instability Escalates

As geopolitical tensions accelerate, the risks to America’s national security and economy become more urgent. Let’s look at some of these flashpoints and the potential dangers they create.

China

China is dealing with potential economic and political pressures from several sources.

• Property sector fragility: The property sector still requires substantial government support, while the potential for further economic disruptions remains.
• Trump tariffs 2.0: Unlike President Donald Trump’s first trade skirmish with China, “Liberation Day” has expanded into an escalating confrontation with the world’s second-largest economy, with each country placing retaliatory tariffs upon one another.¹ While the initial tariffs instituted by both countries have been moderated, China’s current actions include restrictions on critical mineral exports, jeopardizing supply chains, as well as limiting access for U.S. corporations seeking access to Chinese markets.
• U.S.-Taiwan policy: The fact that the sentence on “not supporting Taiwan’s independence” was recently stripped out in an official U.S. government document has angered China. A potential risk scenario would be if China fears that the U.S. moves to bolster Taiwan’s independence aspirations and to decouple China from the Taiwanese center of global and (in particular) Asian chip supply chains. If this would be perceived as a real threat, DWS believes that the only solution would be to be for China to dominate Taiwan.²
• Market recovery?: While DWS sees that visibly lower export demand is the main risk scenario for China, another threat to recovery would be a visible setback in domestic demand, driven by a decline in consumer demand and confidence (although consumption has continued rising with a growth rate of 4.5%-5%).³ Another potential threat to domestic demand could be property investment not recovering. 

Russia

Russia remains a major global antagonist, resisting U.S. geopolitical interests whenever possible. Its war against Ukraine has made it increasingly dependent on military partnerships with Iran and North Korea, two countries openly hostile to the role that the U.S. maintains in the global world order.

However, many experts believe that funding its far-reaching military activities places Russia on a potentially unsustainable trajectory, as it faces mounting economic pressures. As a result, no other country in the world is doing more to directly subvert the global order than Russia. In 2025, its efforts will intensify.⁴

Cyber Risks Proliferate

The recent introduction of DeepSeek amplified national security concerns. Researchers at NowSecure, a leading mobile security company, discovered that the DeepSeek app transmits sensitive data over unencrypted channels, making it highly vulnerable to cyber threats. Even more concerning, these data are routed to servers controlled by ByteDance, the Chinese parent company of TikTok.⁵ 

America’s Strategic Response

The risks confronting American industry and global stability are not theoretical—they are real and have profound consequences.⁶ In response, the U.S. government is actively collaborating with private sector leaders on strategic investments that DWS views as essential to securing America’s economic and national security.⁷

These initiatives include the $500 billion Stargate Project, an AI joint venture created by OpenAI, SoftBank, Oracle and investment firm MGX, designed to maintain U.S. leadership in artificial intelligence. The CHIPS and Science Act authorized approximately $280 billion in new funding to boost domestic research and manufacturing of semiconductors and other technologies in the United States. 

CRTC: A Strategic Defensive Against Geopolitical Risk

The Xtrackers US National Critical Technologies ETF (CRTC) offers a systematic investment strategy by targeting companies operating in the 14 critical technology categories identified by the U.S. Department of Defense as essential for the future health of the U.S. economy. 

Companies in the portfolio are at the forefront of these technologies, providing exposure to the industries crucial to national security and economic stability.

Geopolitical Risk Mitigation

CRTC’s stock selection methodology is powered by J.H. Whitney’s⁸ proprietary 10-factor model that assesses a company’s vulnerability to geostrategic risk across governance, operations and commercial categories. This methodology helps mitigate threats by avoiding investments in companies that could be impacted by global conflicts or foreign government actions. CRTC tracks the Solactive Whitney U.S. Critical Technologies Index, which identifies constituents based on their affiliation with 14 technology sectors prioritized by the U.S. government and through an evaluation of geostrategic risk factors. This enables CRTC to focus on companies essential to America’s economic and national security.

CRTC Portfolio Holdings: Investing in America’s Future

CRTC invests in equities across a broad spectrum of sectors, including technology, healthcare, industrials and energy. The ETF includes a balanced mix of both large-cap growth and value stocks, offering diversified exposure to key industries.

To avoid single stock overconcentration, each holding is capped at 5% at the time of rebalance. Additionally, CRTC’s gross/net expense ratio is a very competitive 0.35%.

The Xtrackers US National Critical Technologies ETF provides investors with a focused approach to navigating uncertainty while capitalizing on America’s technological strength.

Return statistics for Xtrackers US National Critical Technologies ETF (CRTC) (As of 3/31/25)

^{Performance quoted represents past performance and does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Shares are bought and sold at market price (closing price) not net asset value (NAV) and are not individually redeemed from the Fund. Market price returns are based on the midpoint of the bid/ask spread at 4:00 pm Eastern Time (when NAV is normally determined) and do not represent the return you would receive if you traded at other times. To obtain the most recent month-end performance data visit www.Xtrackers.com or call 1-844-851-4255.}

<sup>Indexes are unmanaged; you cannot invest in an index. Index performance is gross of fees and assumes dividend reinvestment. Inclusion of fees would have reduced returns.
1.    Source: DWS Investment Emerging Markets Macro Research Team (Feb. 2025)
2.    Source: DWS Investment Emerging Markets Macro Research Team (Feb. 2025)
3.    Source: DWS Investment Emerging Markets Macro Research Team (Feb. 2025)
4.    Eurasia Group: Top Risks 2025 (Jan. 2025)
5.    https://techstory.in/deepseek-ios-security-risk/ (February 7, 2025)
6.    Council on Global Competition & Innovation: The Case for Market-Led National Security Investments (Dec. 2024)
7.    DWS CIO View: Critical Tech offers opportunity amid deglobalization retreat (March 2024)
8.    J.H. Whitney provides proprietary risk assessment methodologies and advanced analytics designed to assess geopolitical risks to business operations.

The Xtrackers brand represents all systematic investment solutions. Xtrackers ETFs ("ETFs") are managed by DBX Advisors LLC (the "Adviser"), and distributed by ALPS Distributors, Inc. (“ALPS”). The Adviser is a subsidiary of DWS Group GmbH & Co. KGaA, and is not affiliated with ALPS.</sup>

^{Shares are not individually redeemable, and owners of Shares may acquire those Shares from the Fund, or tender such Shares for redemption to the Fund, in Creation Units only.} 

^{Carefully consider the fund's investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the fund's prospectus, which may be obtained by calling 1-844-851-4255, or by viewing or downloading a prospectus from www.Xtrackers.com. Read the prospectus carefully before investing.}

^{War, terrorism, sanctions, economic uncertainty, trade disputes, public health crises and related geopolitical events have led and, in the future, may lead to significant disruptions in U.S. and world economies and markets, which may lead to increased market volatility and may have significant adverse effects on the fund and its investments.}

^{Investing involves risk, including possible loss of principal. Stocks may decline in value. Bond investments are subject to interest-rate, credit, liquidity and market risks to varying degrees. When interest rates rise, bond prices generally fall. Foreign investing involves greater and different risks than investing in US companies, including currency fluctuations, less liquidity, less developed or less efficient trading markets, lack of comprehensive company information, political instability and differing auditing and legal standards. Emerging markets tend to be more volatile and less liquid than the markets of more mature economies, and generally have less diverse and less mature economic structures and less stable political systems than those of developed countries. Funds investing in a single industry, country or in a limited geographic region generally are more volatile than more diversified funds.  Performance of a fund may diverge from that of an underlying index due to operating expenses, transaction costs, cash flows, use of sampling strategies or operational inefficiencies. There are additional risks associated with investing in high-yield bonds, aggressive growth stocks, non-diversified/concentrated funds and small- and mid-cap stocks which are more fully explained in the prospectuses, as applicable. An investment in any fund should be considered only as a supplement to a complete investment program for those investors willing to accept the risks associated with that fund. Please read the applicable prospectus for more information.}

^{CRTC Risk: Critical technologies are technologies that are deemed to be vital to maintaining the national security of the U.S. now and in the future. Companies involved in critical technologies may be subject to a significant amount of governmental regulation, and changes in governmental policies and the need for regulatory approvals may have a material adverse effect on the critical technologies and the companies involved with them. Critical technologies companies are heavily dependent on patent and intellectual property rights which may be difficult to protect. Investing involves risk, including the possible loss of principal. Stocks may decline in value. This fund is non-diversified and can take larger positions in fewer issues, increasing its potential risk. An investment in the fund should be considered only as a supplement to a complete investment program for those investors willing to accept the risks associated with the fund. Please read the prospectus for more information.}

^{Solactive AG (“Solactive”) is the licensor of the Solactive Whitney U.S. Critical Technologies Index (the “Index”). The Index has been developed in cooperation with J.H. Whitney Data Services, LLC (“J.H. Whitney”). The financial instruments that are based on the Index are not sponsored, endorsed, promoted or sold by Solactive or J.H. Whitney in any way and Solactive or J.H. Whitney make no express or implied representation, guarantee or assurance with regard to: (a) the advisability of investing in the financial instruments; (b) the quality, accuracy and/or completeness of the Index; and/or (c) the results obtained or to be obtained by any person or entity from the use of the Index. Solactive or J.H. Whitney do not guarantee the accuracy and/or the completeness of the Index and shall not have any liability for any errors or omissions with respect thereto. The Index has not been designed to achieve positive returns and neither Solactive nor J.H. Whitney is acting as a fiduciary or investment adviser for any user of the Index or investor in any financial instrument based on the Index. Notwithstanding Solactive’s obligations to its licensees, Solactive reserves the right to change the methods of calculation or publication with respect to the Index and Solactive or J.H. Whitney shall not be liable for any miscalculation of or any incorrect, delayed or interrupted publication with respect to the Index. Solactive or J.H. Whitney shall not be liable for any damages, including, without limitation, any loss of profits or business, or any special, incidental, punitive, indirect or consequential damages suffered or incurred as a result of the use of (or inability to use) the Index.}

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