XTRACKERS MSCI WORLD SMALL CAP UCITS ETF

Issuer: Xtrackers

Asset Class: Equity

TER: 35bps

Trading Currency: USD

Pays Income: False

Listing Date: 05 Sep 2025

Ticker: XSWC

ISIN: IE000F354Q61

This fund provides targeted exposure to the small-capitalisation segment of the global equity market, tracking an index composed of thousands of smaller companies across developed countries. It offers investors a tool to capture the distinct growth potential often associated with smaller, more agile firms that may be in earlier stages of their business cycle. These companies are frequently under-covered by analysts compared to their large-cap peers, which can lead to market inefficiencies and opportunities for growth. By investing in a broad basket of these stocks, the fund diversifies individual company risk while offering a pure-play allocation to the small-cap factor, which has historically provided different risk and return characteristics compared to the broader market.

Incorporating this instrument into a well-diversified portfolio can serve several strategic purposes. It can act as a satellite holding to a core allocation of large-cap global equities, potentially enhancing long-term returns and providing diversification benefits, as small-cap stocks do not always move in perfect tandem with large-caps. The fund's physical replication methodology means it holds the underlying stocks directly, offering transparency. Furthermore, as an accumulating share class, all dividends paid by the constituent companies are automatically reinvested back into the fund, which leverages the power of compounding and is tax-efficient for long-term investors in many jurisdictions.

However, investors should be mindful of the associated risks. Small-cap stocks are typically more volatile and less liquid than their larger counterparts, and they can be more susceptible to economic downturns and shifts in market sentiment. This makes the investment more suitable for those with a higher risk tolerance and a long-term investment horizon. It is designed for investors seeking to complement their core holdings and who believe in the long-term growth story of smaller, innovative companies that form the backbone of developed economies worldwide.