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USA

Xtrackers doubles up USA ESG suite

Following hot on the heels of its MSCI USA ESG ETF (USSG), which listed in March, DWS is putting yet another USA ESG ETF to market – this time tracking an ESG-screened version of the S&P 500.

The Xtrackers S&P 500 ESG ETF (SNPE) will start with the S&P 500, and then determine Sith from Jedi among US large and mid caps. Sith include tobacco and weapons companies, the worst violators of the UN Global Compact and those judged by RobecoSAM to be on the dark side of the force.

The fund will target 75% market capitalisation of the S&P 500.

 

Analysis – what’s going on?

DWS already has an ESG ETF tracking an MSCI USA Index that’s basically the same as today’s listing (USSG). Making things better, USSG listed in way back in…. 12 weeks ago. So why are they listing another ESG ETF that’s basically the same three months later?

The best way to answer this riddle is to look at USSG’s assets. Despite being three months old, USSG has a massive $1.2 billion under management. How? European pension funds, of course, which remain the driving force in ESG ETFs. USSG was seeded by a Finnish pension fund that co-developed the ETF.

My guess, and it’s early days, is that Xtrackers has found a pension fund that wants to buy this ESG version of the S&P 500. And DWS put it to market because a big client has asked for it.

 

Bruce bond continues disrupting structured product

Bruce Bond, is widening out his innovative Innovator ETFs, expanding his defined outcome range to include emerging markets and EAFE.

 

  • Innovator MSCI Emerging Markets Power Buffer ETF – July (EJUL)
  • Innovator MSCI EAFE Power Buffer ETF – July (IJUL)

IJUL and EJUL are actively managed structured products in ETF wrappers. They are designed to track the price return of the MSCI EAFE and MSCI EM indexes with capped gains and buffered losses.

Also Read: The Name’s Bond, Bruce Bond

 

They way they work, basically, is as an option spread play. The funds buys options in such a way that it protects investors from the first 15% of losses. (Beyond 15%, the fund will participate in losses). To compensate for this, the fund caps gains at somewhere near 8% a year, depending on what the options market is offering.

Investors wanting this defined outcome are required to invest for the whole year. Those who invest outside this time frame are not guaranteed the defined outcome. The fund resets every 1 July.

 


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Bernie Thurston

Bernie Thurston is the founder and CEO of Ultumus, a leading provider of ETF and index data, calculation, and workflow solutions. With over 20 years of experience in financial technology, Bernie has been at the forefront of index and ETF innovation since 2003.

His finance career began at Markit, where as Managing Director for Equities he designed and developed products for index and ETF composition and dividend forecasting from 2003 to 2011. He then founded and led DeltaOne Solutions as Managing Director, building it into a global provider of index and ETF trading data and technology services. The company managed over 100,000 multi-asset class products before being acquired by Markit in 2015.

Following the acquisition, while working for an ETF issuer, Bernie identified fundamental issues in how index and ETF data was represented across the industry. This led him to found Ultumus in 2016, building solutions for ETF primary market operations. Under his leadership, Ultumus has grown into a market leader serving major financial institutions globally, with its ETF Order Management System (OMS) supporting create and redeem workflows worldwide and its PCF platform calculating and distributing portfolio composition files for ETF issuers across every major market.

Bernie sold Ultumus to SIX Group in 2021, where it continues to expand across Europe, North America, and Asia-Pacific. Known for building lasting teams and leveraging cutting-edge technology, Bernie is focused on establishing Ultumus as the backbone of the global index and ETF industry through standardisation and automation.

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