Xtrackers Emerging Markets Net Zero Pathway Paris Aligned UCITS ETF 1C

Issuer: Xtrackers

Asset Class: Equity

TER: 20bps

Trading Currency: GBP

Pays Income: False

Listing Date: 02 Dec 2022

Ticker: XEMG

ISIN: IE000TZT8TI0

This fund offers a targeted investment solution for those looking to combine the growth potential of emerging market equities with stringent climate-focused objectives. It is designed to track a benchmark that aligns with the goals of the Paris Agreement, aiming to limit the global temperature increase to 1.5°C above pre-industrial levels. The investment strategy seeks to significantly reduce the portfolio's exposure to greenhouse gas emissions and potential fossil fuel reserves compared to the broader emerging markets index. By focusing on companies that are on a clear decarbonization pathway, the fund provides exposure to businesses that are better positioned for the transition to a low-carbon economy.

The underlying index employs a rules-based methodology to select and weight its constituents. It overweights companies with lower carbon intensity and those generating revenues from green activities, while significantly reducing or excluding firms involved in high-carbon sectors like thermal coal or unconventional oil and gas. This systematic approach not only reduces the portfolio's carbon footprint but also aims to mitigate transition risks associated with climate change, such as regulatory changes and shifting consumer preferences. The methodology ensures that the portfolio maintains broad diversification across various emerging market countries and sectors, while adhering to its climate-conscious mandate.

This financial product presents a compelling option for investors who wish to integrate environmental considerations into their core emerging market equity allocation. It allows for participation in the dynamic growth of developing economies while actively supporting the global effort to combat climate change. By investing in a portfolio of companies leading the charge in sustainability and carbon reduction, investors can align their capital with long-term environmental goals. It offers a transparent, efficient, and impactful way to gain emerging market exposure that is consistent with a forward-looking, climate-aware investment philosophy.