Xtrackers MSCI Europe Climate Transition UCITS ETF 1C EUR

Issuer: Xtrackers

Asset Class: Equity

TER: 12bps

Trading Currency: GBP

Pays Income: False

Listing Date: 09 Mar 2023

Ticker: XECT

ISIN: IE000N9MLVT1

This fund offers targeted exposure to a portfolio of European companies leading the transition towards a low-carbon economy. The strategy is designed to align with the stringent criteria of the EU's Climate Transition Benchmark, resulting in a portfolio with a significantly lower carbon intensity compared to the broader European market. It achieves this by systematically re-weighting securities based on their climate credentials, favouring firms that are actively managing climate-related risks and capitalizing on opportunities presented by the green transition. This approach seeks to provide long-term sustainable growth by investing in companies well-positioned for a future shaped by climate action.

The underlying portfolio begins with a broad European equity universe but is refined through a comprehensive screening process. Companies with significant business involvement in fossil fuels, such as thermal coal and unconventional oil and gas, are systematically excluded. The methodology also removes firms engaged in controversial activities like tobacco production and certain weapons manufacturing, as well as those violating international societal norms. Beyond these exclusions, the strategy actively increases its allocation to companies demonstrating a clear commitment to decarbonisation, such as those setting science-based emissions reduction targets or generating substantial revenue from green technologies.

This investment provides a vehicle to participate in the European equity market while aligning a portfolio with the objectives of the Paris Agreement. By focusing on companies that are best prepared for the climate transition, the fund aims to mitigate downside risks associated with tightening environmental regulations and shifting consumer preferences. Simultaneously, it seeks to capture the upside potential from innovation and leadership in the growing green economy, making it a suitable core holding for an investor building a forward-looking, sustainable portfolio.