Xtrackers MSCI Emerging Markets Climate Transition UCITS ETF

Issuer: Xtrackers

Asset Class: Equity

TER: 20bps

Trading Currency: USD

Pays Income: False

Listing Date: 01 Nov 2023

Ticker: XEMC

ISIN: IE000DNSAS54

This fund offers targeted exposure to emerging market companies that are leading the transition to a low-carbon economy. It is designed to track the MSCI Emerging Markets Climate Transition CTB Select Index, which adheres to the stringent criteria of the EU's Climate Transition Benchmark (CTB). The underlying index comprises large and mid-cap securities across various emerging countries. Its methodology focuses on significantly reducing the portfolio's carbon footprint compared to a standard market-cap-weighted emerging markets index and aims for an ongoing, year-on-year decarbonization pathway of at least 7%.

The investment strategy involves a rules-based approach that re-weights securities based on their climate credentials. Companies demonstrating a commitment to reducing carbon emissions, generating green revenues, and setting credible reduction targets are overweighted. Conversely, firms with high carbon intensity, significant fossil fuel reserves, or involvement in controversial business activities are either underweighted or excluded entirely from the portfolio. By employing a direct, physical replication method, the fund holds the actual shares of the constituent companies, providing a transparent investment vehicle for those looking to participate in the climate transition within developing economies.

This product is particularly suitable for environmentally conscious investors seeking to integrate climate considerations into their emerging markets equity allocation. It can serve as a core component of a diversified portfolio, offering the potential for long-term capital growth while actively mitigating climate-related transition risks. By investing in companies that are better prepared for a future with more stringent environmental regulations and a global shift towards sustainability, the fund seeks to capture opportunities arising from the green industrial revolution across the developing world.