XTrackers II ESG EUR Corporate Bond Short Duration UCITS ETF

Issuer: Xtrackers

Asset Class: Fixed Income

TER: 16bps

Trading Currency: GBP

Pays Income: False

Listing Date: 28 Jul 2020

Ticker: XZE5

ISIN: LU2178481649

This fund offers targeted exposure to the short-term, investment-grade corporate bond market within the Eurozone. By focusing on debt with maturities between 0 and 3 years, the strategy aims to minimize interest rate sensitivity, also known as duration risk. This makes it a potentially attractive option for investors concerned about the impact of rising interest rates on fixed-income portfolio values. The portfolio consists of bonds issued by corporations, providing a yield advantage over government debt while maintaining a focus on high-quality issuers to manage credit risk. It serves as a core fixed-income holding for those seeking stable income and capital preservation with reduced volatility compared to longer-duration bond funds.

A key feature of this investment is its strong commitment to sustainable and climate-conscious principles. The underlying index is classified as an EU Paris-Aligned Benchmark (PAB), meaning its constituents are selected and weighted to align with the long-term goals of the Paris Agreement. This involves a significant and progressive decarbonization pathway for the portfolio, aiming for a substantial reduction in carbon emissions compared to the broader market. In addition to the climate focus, the index also applies Socially Responsible Investing (SRI) screens, excluding companies involved in controversial business activities. This dual ESG approach provides a solution for investors who want to align their fixed-income allocation with robust environmental and ethical standards without sacrificing the defensive characteristics of short-duration corporate credit.