First U.S. ETF Tracking S&P 500 ESG Index Draws $25 Million

By Dieter Holger

The first U.S. exchange-traded fund tracking the new environmental, social and governance version of the S&P 500 has attracted $25 million in assets as it enters its second day of trading.

DWS Group GmbH & Co. KGaA (DWS.XE), the asset-management arm of Deutsche Bank AG (DBK.XE), launched the Xtrackers S&P 500 ESG ETF (SNPE) on the New York Stock Exchange on Wednesday. The fund charges an expense ratio of 0.11% or $11 for every $10,000 invested, placing it a price point below most ESG ETFs on the market today.

The ETF tracks the S&P 500 ESG Index that S&P Global Inc. (SPGI) debuted in early April. Later that month, UBS Group AG (UBS) launched the first ETF following the index, the UBS ETF S&P 500 ESG UCITS ETF, on European exchanges.

The ESG index seeks to deliver the same risk and return as its parent benchmark, while targeting 75% of the S&P 500's traditional market capitalization. It screens out tobacco, makers of certain weapons and companies with a low score as defined by the United Nations Global Compact principles for responsible businesses.

"The index helps investors align their investments with their values while still achieving a risk and return profile in line with the S&P 500," said Reid Steadman, S&P's global head of ESG indices.

Asset managers have rapidly expanded their range of sustainable funds in recent years to meet demand from investors. Around 80% of the ESG ETFs available globally were put on the market in the last five years, according to research firm Morningstar.

The S&P 500 ESG ETF follows in the footsteps of DWS's Xtrackers MSCI USA ESG Leaders Equity ETF (USSG) launch in March, which was one of the most successful fund debuts of all time thanks to a more than $800 million investment from Finnish pension insurance company Ilmarinen. USSG now holds close to $1.9 billion in assets and is the second largest ESG ETF by market value, according to FactSet. It charges $10 for every $10,000 invested, slightly below DWS's latest ESG ETF.

"Our clients seek solutions that not only deliver on their investment strategy, but also help them achieve their sustainability goals," said Luke Oliver, head of index investing for the Americas at DWS.

Write to Dieter Holger at [e-mail]; @dieterholger

(END) Dow Jones Newswires

June 27, 2019 10:22 ET (14:22 GMT)

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