Xtrackers MSCI China A ESG Screened Swap UCITS ETF 1C

Issuer: Xtrackers

Asset Class: Equity

TER: 29bps

Trading Currency: USD

Pays Income: False

Listing Date: 08 Jul 2022

Ticker: XCNA

ISIN: LU2469465822

This fund provides targeted exposure to the Chinese A-share market, specifically focusing on large and mid-capitalisation companies. It is designed to replicate the performance of an index that covers mainland China-listed securities, offering investors a direct way to participate in the domestic Chinese economy. The A-share market represents a significant and distinct segment of the global equity universe, driven by local consumption, technological innovation, and government policies. The fund employs a physical replication strategy, meaning it directly purchases and holds the underlying stocks that constitute the index. This approach ensures a high degree of transparency and a close tracking relationship with the benchmark's performance.

A key differentiating feature of this investment product is its integration of Environmental, Social, and Governance (ESG) principles. The underlying index systematically screens out companies involved in controversial sectors such as tobacco, thermal coal, oil sands, and certain types of weapons. It also excludes firms that are non-compliant with the United Nations Global Compact principles. This ESG-focused methodology is designed to appeal to investors who want to align their financial goals with sustainability objectives, potentially reducing exposure to companies with higher long-term risks associated with poor ESG practices. The index also applies a 5% cap on individual company weights to promote diversification and mitigate concentration risk.

This fund is suitable for investors with a long-term growth outlook who are seeking specific exposure to mainland China and are comfortable with the inherent risks of single-country emerging market investing. It can serve as a strategic component within a broader, globally diversified portfolio. The ESG screening makes it particularly relevant for sustainability-conscious individuals and institutions. As an accumulating share class, any dividends paid by the constituent companies are automatically reinvested back into the fund, fostering the potential for enhanced long-term compound growth without generating taxable income events for the investor.