XTrackers Global Aggregate Bond Swap UCITS ETF 3D GBP Hedged

Issuer: Xtrackers

Asset Class: Fixed Income

TER: 20bps

Trading Currency: GBX

Pays Income: False

Listing Date: 22 Apr 2016

Ticker: XBGG

ISIN: LU0942970368

This investment vehicle offers a core fixed-income solution for investors seeking broad, diversified exposure to the global bond market with an integrated sustainability focus. The strategy is designed to mirror the performance of a specific global aggregate bond index that incorporates robust Environmental, Social, and Governance (ESG) criteria. It achieves this by physically holding a portfolio of investment-grade government and corporate bonds from both developed and emerging market issuers. The inclusion of ESG and Socially Responsible Investing (SRI) filters means the portfolio actively excludes companies involved in controversial sectors such as tobacco, thermal coal, and certain weapons manufacturing, while favouring those with higher sustainability ratings.

The underlying portfolio is globally diversified, providing access to thousands of individual debt securities across various countries and currencies, with a cap on any single issuer to prevent over-concentration. This broad diversification helps to mitigate issuer-specific risk and provides a comprehensive representation of the global investment-grade fixed-income universe. The systematic application of ESG and SRI screens aims to align the investment with the values of socially conscious investors, potentially reducing exposure to long-term risks associated with poor corporate governance or negative environmental impacts.

A crucial feature of this particular share class is its currency-hedging mechanism. It is specifically designed for investors whose base currency is the British Pound. The hedging strategy aims to minimize the impact of currency fluctuations between the portfolio's underlying holdings and the Pound Sterling. This makes it an attractive option for UK-based investors who want to gain exposure to global bond markets without taking on the additional, and often volatile, risk of foreign exchange movements. The product is therefore well-suited for building a stable, long-term, and ethically-screened core in a diversified investment portfolio.