Xtrackers MSCI Pacific ex Japan ESG Screened UCITS ETF 1D

Issuer: Xtrackers

Asset Class: Equity

TER: 15bps

Trading Currency: GBP

Pays Income: False

Listing Date: 12 Apr 2024

Ticker: XPEJ

ISIN: LU2755521270

This fund is designed to provide investors with targeted exposure to the developed equity markets of the Pacific region, specifically excluding Japan. It achieves this by tracking the performance of the MSCI Pacific ex Japan ESG Screened Select Index, which is composed of large and mid-capitalization companies across four key developed countries: Australia, Hong Kong, New Zealand, and Singapore. The core objective is to offer a diversified investment vehicle that reflects the performance of these specific economies, while integrating a robust Environmental, Social, and Governance (ESG) screening methodology to align with the principles of sustainable investing.

The ESG integration is a key feature of the investment strategy. The underlying index applies a set of exclusionary filters to remove companies with significant business involvement in controversial areas. These exclusions target firms associated with controversial weapons, civilian firearms, tobacco, thermal coal, and oil sands. Furthermore, the index also screens out companies that are found to be in violation of the United Nations Global Compact principles, which cover human rights, labor, environment, and anti-corruption. This screening process aims to construct a portfolio of companies with stronger ESG profiles, potentially reducing exposure to long-term risks associated with unsustainable or unethical business practices.

For portfolio construction, this instrument can serve as a strategic building block for those looking to fine-tune their Asian market allocations. By separating Japan, it allows investors to make a more deliberate decision on their exposure to the world's third-largest economy versus other developed Pacific nations. It is particularly suitable for investors seeking to capture the growth potential of markets like Australia and Hong Kong through a single, cost-effective product. The added ESG layer makes it an attractive option for sustainability-focused investors who want to ensure their capital is directed towards companies that meet specific ethical and operational standards, without sacrificing broad market diversification within the region.