Xtrackers by DWS Marks a Decade of Innovation in the U.S. ETF Market

Xtrackers by DWS marks a decade of innovation and commitment to sustainable investing in the U.S. exchange-traded fund (ETF) market this month.

It is 10 years since Xtrackers entered the US market with the launch of Xtrackers MSCI EAFE Hedged Equity ETF (DBEF), which now has around USD 4 billion in assets under management. Since then Xtrackers has become firmly established as a leading provider of environmental, social and governance (ESG) funds, and sought after niche exposures, benefitting from the global strength of being part of one the world’s largest ETF providers.

Xtrackers by DWS has launched a number of industry firsts in the ETF space, including the U.S. markets first S&P 500 ESG ETF (SNPE). In more recent firsts, DWS launched the Xtrackers S&P MidCap 400 ESG ETF (MIDE) and the Xtrackers S&P SmallCap 600 ESG ETF (SMLE), further expanding the Xtrackers footprint in the rapidly growing area of sustainable index investing.² Assets under management in Xtrackers NYSE-listed ESG ETFs is currently USD 4.3 billion.³

Xtrackers by DWS looks forward to another 10 years of being a leading innovator in the US ETF market. “Being a global leader on all things ESG is part of our DNA and will continue to be core to our service proposition to clients going forward,” adds Noack. “We firmly believe that our three pillars of ‘Innovation, Access and Value’ position us extremely well to bring to market highly relevant ETF solutions by collaborating with clients here in the US as well as globally.”

Track Record of Innovation

In 2011, launched a range of currency hedged Xtrackers, starting with DBEF, that proved popular with investors looking for efficient ways to take international equity exposure in an environment of a strengthening US dollar. It paved the way for Xtrackers to establish itself as a leading innovator in currency-hedged exposures, but also in providing access to mainland China equities, to high-yield bonds, and increasingly to ESG indices.

“Our team at the time created a unique range of currency-hedged international equity ETFs that turned out to be the right products at the right time to fill a gap in the market. Prior to the Xtrackers launch, U.S. ETF investors wanting to gain exposure to non-U.S. equities generally had to accept implicit currency exposure in their portfolios,” said Arne Noack, DWS Head of Systematic Investment Solutions, Americas.

During this time, DBEF was one of the most effective ways for US ETF investors to participate in the equity rally without experiencing significant losses from implicit currency exposure.

Amanda Rebello, DWS Head of Passive Sales, U.S. onshore, commented: “As the effects of ultra-loose monetary policy and quantitative easing impacted markets around 2015, our currency hedged Xtrackers range really came into its own. That was when their popularity soared, raising close to $20 billion by the end of 2015.”

While currency hedged ETF solutions still represent around 23% of Xtrackers U.S. assets under management, the overall mix has become significantly more diversified. Xtrackers U.S. ETF assets under management now comprise1: USD 7.6bn fixed income (notably USD high yield bonds ETFs), USD 4.3bn in ESG-focused solutions (especially U.S. large-cap equity ETFS), USD 3.6bn non currency hedged international equities (in particular, onshore China A-shares ETFs) and just over one billion in factor-based strategies. “Our key to success has mostly been listening to our clients closely and executing on their feedback,” emphasizes Rebello.

Global Perspective, Client-Driven

Some of the largest U.S.-listed Xtrackers ETFs were developed directly in response to client requests for new exposures, examples being China A-Shares ETF (ASHR) and Xtrackers MSCI USA ESG Leaders Equity ETF (USSG). Key milestones for the Xtrackers business over the past decade include:

• 2021 – Xtrackers launched ETFs providing exposure to ESG versions of the S&P MidCap 400 and S&P SmallCap 600 indices; MIDE, SMLE
• 2020 – Xtrackers launches emerging markets bond ESG ETF in the US, ESEB
• 2019 – Launches S&P 500 ESG ETF, SNPE
• 2019 – Achieved ‘the biggest launch of any ETF in the past 15 years’⁴ with Xtrackers MSCI USA ESG Leaders Equity ETF, USSG
• 2018 – Innovated in the U.S. high yield bond space by launching two ETFs to split the high yield bond market into high yielding- and low yielding segments; HYUP and HYDW
• 2016 – Disrupted the high-yield bond ETF space by bringing to market the low-cost Xtrackers High Yield Corporate Bond ETF HYLB
• 2013 – Launched an ETF providing exposure to Chinese A-Shares with Xtrackers Harvest CSI 300 China A-Shares ETF, ASHR
• 2011 – Launched currency-hedged MSCI EAFE ETF in the US, DBEF

The Xtrackers US franchise, with close to USD 22bn in assets under management, has grown to become a top 20 issuer in the most competitive ETF market globally and a fully integrated part of the global DWS ETF business, which has around USD 200 billion in assets under management².

¹ ESG is the abbreviation for “environmental, social and governance” – a term that encompasses environmental considerations, social affairs and corporate management. Source: DWS

²Source: S&P Dow Jones Indices

³Source: DWS, as at 4 June 2021.

⁴ETF.com, March 8, 2019: https://www.etf.com/sections/features-and-news/esq-etfs-launch-biggest-15-years

About DWS Group

DWS Group (DWS) is one of the world's leading asset managers with USD $892bn of assets under management (as of 31 March 2021). Building on more than 60 years of experience, it has a reputation for excellence in Germany, Europe, the Americas and Asia. DWS is recognized by clients globally as a trusted source for integrated investment solutions, stability and innovation across a full spectrum of investment disciplines.

We offer individuals and institutions access to our strong investment capabilities across all major asset classes and solutions aligned to growth trends. Our diverse expertise in Active, Passive and Alternatives asset management – as well as our deep environmental, social and governance focus – complement each other when creating targeted solutions for our clients. Our expertise and on-the-ground-knowledge of our economists, research analysts and investment professionals are brought together in one consistent global CIO View, which guides our investment approach strategically.

DWS wants to innovate and shape the future of investing: with approximately 3,500 employees in offices all over the world, we are local while being one global team. We are investors – entrusted to build the best foundation for our clients’ future.

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DWS ESG Funds: Xtrackers S&P 500 ESG ETF (SNPE); Xtrackers S&P MidCap 400 ESG ETF (MIDE); Xtrackers S&P SmallCap 600 ESG ETF (SMLE); Xtrackers MSCI USA ESG Leaders Equity ETF (USSG); Xtrackers J.P. Morgan ESG Emerging Markets Sovereign ETF (ESEB). An ESG Fund’s investment strategy limits the types and number of investment opportunities available to the fund and, as a result, the fund may underperform other funds that do not have an ESG focus.

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R – 084532 (07/21) DBX004934 (07/22)

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