Xtrackers MSCI USA Climate Transition UCITS ETF 1D

Issuer: Xtrackers

Asset Class: Equity

TER: 9bps

Trading Currency: USD

Pays Income: False

Listing Date: 09 Mar 2023

Ticker: XCUD

ISIN: IE000GYDNJS5

This fund offers exposure to a portfolio of large and mid-cap U.S. companies that are aligning with the transition to a low-carbon economy. The investment strategy is based on the EU Climate Transition Benchmark (CTB) framework, which seeks a significant reduction in carbon emissions intensity compared to a standard market-cap-weighted universe. The methodology involves selecting and weighting constituents to be collectively compatible with a 1.5°C global warming scenario as outlined in the Paris Agreement. This approach not only screens for companies with better current carbon profiles but also favours those demonstrating a credible commitment to decarbonisation through science-based targets and green revenue generation.

The strategy is tailored for investors aiming to align their portfolios with global climate goals while maintaining broad exposure to the U.S. equity market. By focusing on companies that are either leading their respective sector's climate transition or are poised to benefit from it, the fund offers potential for long-term growth driven by the structural shifts towards sustainability. It can serve as a core holding for environmentally-conscious investors seeking to mitigate climate-related transition risks and capture opportunities arising from the global energy transition, without sacrificing diversification across the U.S. corporate landscape. The selection process ensures that companies from all sectors (excluding certain controversial activities) are eligible, provided they meet the specific climate criteria.

This product can act as a foundational building block for a U.S. equity allocation within a broader investment portfolio. Its focus on climate transition leaders provides a differentiated exposure compared to traditional market indices. This thematic overlay may enhance a portfolio's resilience to transition risks, such as carbon pricing and stricter environmental regulations, while positioning it to benefit from innovation in clean technologies and sustainable practices. The underlying index's transparent, rules-based methodology provides a systematic and robust way to access this forward-looking investment theme.