DWS has entered Europe’s active ETF market with the launch of two equity funds capturing companies leading the green transition.
The Xtrackers World Green Transition Innovators UCITS ETF and the Xtrackers World Small Cap Green Transition Innovators UCITS ETF have listed on Deutsche Boerse with total expense ratios (TERs) of 0.35% and 0.45%, respectively.
Both ETFs actively target companies driving the green transformation of the economy through innovation determined by an above average quantity of patent applications in these areas.
Michael Mohr (pictured), global head of Xtrackers products at DWS, commented: “The transformation of the economy towards climate neutrality and resource conservation remains a key sustainability goal of the United Nations (UN) and the European Union (EU).
“The two Xtrackers Green Transition Innovators (GTI) UCITS ETFs offer an innovative, forward-looking approach to selecting companies that innovate in the green transition.”
Patents are designed to encourage innovation by protecting the intellectual property rights of companies creating new technologies.
“Patent activity can also be seen as an indicator of above average of excess returns and earnings growth, with an established link between the number of patents granted and past stock performance,” according to Mohr.
The new funds represent the $987bn asset manager’s first foray into active ETFs, following hot on the heels of French firm Amundi.
At 2.3% market share, active ETFs remain a small section of the wider European ETF asset base. However, they are beginning to grow rapidly, commanding 7.7% of inflows in Q3, according to data from Morningstar.
