A sound investment process and strong management team underpin Xtrackers MSCI EAFE ESG Leaders Eq ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy's investment process inspires confidence and earns a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in liquidity exposure and an underweight in yield exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low yield exposure is rooted in holding fewer stocks with high dividend or buyback yields -- instead, typically holding stocks in an early stage of development. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

ASML Hld

AstraZeneca

Moelis

Novan

TotalEnergies SE

Suncor Energy

Osisko Gold Royalties

Credit Suisse

CRH Plc Sponsored ADR

American Airlines

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. Xtrackers MSCI EAFE ESG Leaders Eq ETF earns a High Process Pillar rating. The predominant contributor to the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Impressive risk-adjusted performance also supports the rating. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the process was successful over that period. The parent firm's five-year risk-adjusted success ratio of 59% supports the process. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. Their commendable success ratio suggests that this firm does well for investors and that this fund may benefit from that.

The investment strategy as stated in the fund's prospectus is:  The investment seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI EAFE ESG Leaders Index.  The index consists of large- and medium-capitalization companies across developed markets countries, and excluding Canada and the United States. The fund will invest at least 80% of its total assets (but typically far more) in component securities (including depositary receipts in respect of such securities) of the index. 

 The portfolio is overweight in healthcare by 2.6 percentage points in terms of assets compared with the category average, and its real estate allocation is similar to the category. The sectors with low exposure compared to category peers are energy and industrials; however, the allocations are similar to the category. The portfolio is positioned across 392 holdings and is relatively top-heavy. Of the strategy's assets, 25.3% are concentrated within the top 10 holdings, compared to the typical peer's 15.7%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 25% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

High

Process

Xtrackers’s team is strong compared with others in the industry, resulting in an Above Average People Pillar rating. There are four managers listed on the fund: Patrick Dwyer, Shlomo Bassous, Bryan Richards, Ashif Shaikh. The team is well equipped, with an average of 17 years of portfolio management experience. Together, they manage a total of 29 strategies, with a Silver asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Above Average

People

In the past two years, DWS has been under heavy scrutiny from the SEC and German authorities owing to greenwashing allegations that were initially raised in August 2021 by the firm’s former chief sustainability officer Desiree Fixler. The SEC announced on Sept. 25, 2023, that it has fined DWS USD 19 million for failing to implement procedures to ensure that all investment staff members were following its environmental, social, and governance policies. This relates to funds where ESG factors were analyzed alongside other financially material factors, but where managers retained discretion over ESG outcomes. In addition, the firm was ordered to pay USD 6 million for deficiencies in its anti-money-laundering processes that were uncovered in a separate investigation. The investigation by the German authorities into the firm's ESG disclosures is still ongoing.  
The SEC findings underline that despite strong senior management commitment, it takes a considerable amount of time and resources to embed sustainability across all levels of an organization for firms without a long-standing sustainability heritage. Overconfidence and failure to deal with internal criticism adequately appear to have contributed to DWS' misleading statements on ESG matters. While it's difficult to quantify the financial damage to clients and no misstatements were detected in financial disclosures or prospectuses, we believe the firm’s shortcomings have the potential to adversely affect investor outcomes. Hence, we welcome DWS' efforts to strengthen governance around ESG integration and communicate more conservatively about its ESG capabilities.
Questionable and unsteady leadership has contributed to the DWS' woes. Previous CEO Asoka Woehrmann, who had spearheaded the firm's ESG push, stepped down in June 2022 as a result of the ESG investigations. His credibility had already been harmed following his use of personal email for business purposes and a large payment made to him by a client when he was head of Deutsche Bank's private-client business before being appointed as DWS' CEO in 2018. His successor Stefan Hoops is the firm's sixth CEO in the past 10 years, highlighting the instability in the firm's top leadership. This appointment also shows the continued influence of its parent company, even after the partial IPO in 2018. Hoops has spent most of his career at Deutsche Bank but has no asset-management background.
Despite all these negative headlines and shaky leadership, DWS has managed to remain quite stable in its investment ranks. The firm has also made strides to gain greater independence. For example, since 2020, bonuses have been linked to the firm's own performance rather than to that of the bank as a whole, which supports alignment and talent retention. Variable remuneration takes into account performance of up to five years.
DWS' vast fund lineup covers all asset classes, including passive strategies, which are offered under the Xtrackers brand. Many offerings don't distinguish themselves, but there are genuine areas of strength among active strategies, and fees are competitive across many funds. While the product development process has been streamlined, and although the firm has launched new strategies at a slower pace, lineup turnover remains a concern as a culture of asset-gathering prevails. New offerings are partly related to an expansion of ESG capabilities, but the firm is also building out its thematic equity, multi-asset, alternatives, and exchange-traded fund range. 
At this stage, we continue to believe that DWS' strengths justify a Parent Pillar rating of Average despite several weaknesses in its stewardship practices, but we will closely monitor the company for further disruption.

Average

Parent

Xtrackers MSCI EAFE ESG Leaders Equity ETF

EASG tracks a principles-based, market-cap-weighted index of stocks from developed markets outside of the US and Canada.

For investors seeking momentum, Xtrackers MSCI EAFE ESG Leaders Equity ETF EASG is probably on radar. The fund just hit a 52-week high and is up 38.82% from its 52-week low price of $21.25/share.

ESG ETF (EASG) Hits New 52-Week High

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Despite the Noise, ESG is Gaining in Popularity

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In this research piece, we discuss the possible pathway to India's environmental goals, as well as select investment opportunities that reflect ongoing progress across the ESG landscape. India fares well in disclosures with 97% of MSCI India constituents publishing sustainability reports.

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Essentially unheard of a decade ago, investing strategies that screen holdings for adherence to Environmental, Social and Governance values have captured increasing investor interest. Tony Campos, Head of Sustainable Investment, Americas, FTSE Russell, joins the podcast to explain how the process of ESG screening works at FTSE Russell.

From Fad To Sustainable Trend: The ESG Juggernaut Continues To Pick Up Steam (Podcast)

Unless you've been living under a rock (possibly to avoid COVID-19, so it's forgivable), you're well aware of the rising popularity of environmental, social and governance (ESG) investing in the capital markets. If you're still not on the ESG bandwagon, then add some green to your portfolio with ETFs like the Xtrackers MSCI EAFE ESG Leaders [.

Add Some Green to Your Portfolio With the EASG ETF

Environmental, social and governance (ESG) investing can and will continue growing at epic proportions. To get in on the action, ETF investors should consider following the leaders in ESG with funds like the Xtrackers MSCI EAFE ESG Leaders Equity ETF (EASG).

As ESG Continues to Grow to Record Highs, Check Out the EASG ETF

It would be an understatement to suggest that labor has been in the headlines lately.  Between the unemployment statistics, Labor Day, and the passing of one of the staunchest advocates for workers’ rights, Ruth Bader Ginsburg, how companies treat their workforce seems like an important topic.

ESG Under Fire: Beyond the Investment

Environmental, social, and governance (ESG) investing is reaching new heights in its popularity even amid the Covid-19 pandemic. Now, the big players are primed to enter the market like JP Morgan who is specifically looking to make a move in the green bond game.

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It’s no doubt that environmental, social and governance (ESG) investing has taken off in a big way even before and during the Covid-19 pandemic. However, in order to maintain due diligence in the space, more steps need to be taken, and that’s exactly what Denmark is doing by increasing transparency.

Denmark Takes a Large Step in ESG Investing Transparency

When it comes to buy-and-hold investments, one option to consider is environmental, social and governance (ESG) investing—right now, it’s what long-term investors are looking at following an increased interest in the space as of late. “Long-term investors—those who have perpetually flagged the kind of systemic and workforce issues that now face companies everywhere—are having an [.

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Thanks to the Covid-19 pandemic, 2020 is one year that everyone wants to forget, including chief financial officers (CFOs). Speaking of which, a Forbes report noted that CFOs are placing a high priority in 2021 on environmental, social, and governance (ESG).

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As environmental, social, and governance (ESG) investing continues to gain in popularity, due diligence is necessary in order to ensure the veracity of companies marketing themselves as ESG-friendly. As such, HSBC launched a reporting service that provides asset owners and managers with an independent measurement of how focused their listed asset investments are on ESG [.

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The coronavirus pandemic did no favors to emerging markets (EM) investors who are now looking around scratching their heads, wondering where to head next. While a dollar-cost averaging approach to EM assets as a value play might be an option, EM investors are looking to other options that can weather a storm better—enter environmental, social, [.

Emerging Markets Could Be Turning Their Attention to ESG

Environmental, social, and governance (ESG) investing has proven its mettle in the face of the Covid-19 pandemic, which can only bring wider adoption to a space that was already gaining in popularity. Global investment firm JPMorgan has been effusive in its praise for ESG, comparing its resilience against Covid-19 to other major recessionary events that [.

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More than ever, investors recognize the risks and opportunities associated with the low carbon transition and are incorporating a wider set of considerations into their decision making.

Targeted Sustainability

Clean energy alternatives and lower carbon emissions are only a couple of reasons within a larger set of benefits offered by environmental, social, and governance (ESG) investing. One report suggests that ESG initiatives can also have a positive effect on workforce sentiment–something that more than likely took a hit following the higher number of unemployment [.

Report Shows that Workforce Sentiment is Improved with ESG

Environmental, social, and governance (ESG) investing is gaining more traction, and the coronavirus pandemic only spurred that interest as opposed to stifling it. This, in turn, is helping to fuel a healthy appetite for social bonds.

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It’s been a decade of strong performance for environmental, social, and governance (ESG) investing when compared to the broader market. Data provider Morningstar research noted that European-based ESG funds have outperformed conventional funds in various timeframes—on, three, five, and 10 years.

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According to Morningstar, the global sustainable funds universe experienced net inflows of nearly $46 billion during the first quarter of 2020, compared with net outflows of $385 billion for the overall funds universe.

COVID-19 Drives ESG Demand

Healthcare equities can’t have all the funds when it comes to investing ideas in a pandemic environment. As such, investors can also use COVID-19 bonds to respond to the market changes—the debt issues have been gaining popularity as an ESG (environmental, social, and governance) play.

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Exchange-traded fund (ETF) provider powerhouse BlackRock is ready to double down when it comes to environmental, social, and governance (ESG) investing. BlackRock CEO Larry Fink said the company would begin implementing more ESG-tilted endeavors, including more sustainability screeners as well as heading for the exits on certain fossil fuel investments.

ESG Investing Gets BlackRock’s Vote of Confidence

The first quarter obviously wasn’t a banner one for any sector given the widespread effects of the pandemic. However, a recent BlackRock report entitled “Sustainable Investing: Resilience amid Uncertainty,” noted that environmental, social and governance (ESG) was able to withstand the storm.

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As environmental, social, and governance (ESG) investing continues to rise in popularity, more investors are searching for content on the subject. In a research report entitled “Making a Difference, Marketing a Difference” by Peregrine Communications, investors are demanding more than what is being provided by asset managers.

Investor Demand for ESG Content Exceeds Supply

Even though the coronavirus pandemic rained down some heavy sell-offs during a tumultuous first quarter, environmental, social and governance (ESG) funds were holding steady with inflows globally. Per a ThinkAdvisor report, fund flows “did much better in the first quarter compared with overall global funds.

News for Xtrackers MSCI EAFE ESG Leaders Equity ETF ETF (EASG)