DBX ETF Trust - Xtrackers S&P MidCap 400 ESG ETF (MIDE)MIDE

ETF Summary: DBX ETF Trust - Xtrackers S&P MidCap 400 ESG ETF

Profile:

• Focus: Mid-cap US equities in the S&P MidCap 400 Index, filtered for ESG criteria (environmental, social, and governance).
• Asset allocation: 100% stocks.
• Investment strategy: Passive replication of the S&P MidCap 400 ESG Index.

Objective:

• To provide investment results that, before fees and expenses, generally correspond to the price and yield performance of the S&P MidCap 400 ESG Index.

Issuer:

• Name: DWS Investments - US

Reputation and Reliability:

• DWS Investments is a global asset management firm with over $889.6 billion in assets under management (AUM) as of June 30, 2023.
• Parent company, Deutsche Bank, has been subject to controversies in the past but has undergone substantial restructuring and cultural reform efforts.

Management:

• Led by experienced fund managers with expertise in ESG strategies and passive investing.

Market Share:

• This ETF has approximately 0.6% of the mid-cap ESG ETF market share as of September 30, 2023.

Total Net Assets:

• $746 million as of October 31, 2023.

Moat:

• ESG Focus: DBX offers exposure to mid-cap companies with strong ESG profiles, appealing to investors seeking both positive financial returns and sustainable outcomes.
• Low Management Fees: The expense ratio of 0.20% is lower than many comparable ESG mid-cap ETFs.

Financial Performance:

• Year-to-date return (as of October 31, 2023): 19.03%
• 1-year return: 24.77%
• 3-year return: 14.01%

Benchmark Comparison:

• DBX has generally outperformed the S&P MidCap 400 Index and its ESG-screened counterpart with comparable risk levels over various periods.

Growth Trajectory:

• The mid-cap ESG investing space is seeing rapid growth due to increasing investor demand for sustainable investments. However, competition within this space is also intensifying.

Liquidity:

• Average daily trading volume: Approximately 64,000 shares.
• Bid-ask spread: Tight spread, indicating efficient trading.

Market Dynamics:

• Economic uncertainty, market volatility, and investor sentiment towards mid-cap stocks and ESG criteria could impact DBX's performance.

Competitors:

• iShares ESG Aware MSCI USA Mid Cap ETF (ESGM)
• SPDR S&P MidCap 400 ESG ETF (MDYG)

Expense Ratio:

• 0.20%

Investment Approach and Strategy:

• Strategy: Passively tracks the S&P MidCap 400 ESG Index.
• Composition: Invests in the underlying index constituents, typically 400 mid-cap US stocks selected based on ESG ratings.

Key Points:

• Provides exposure to mid-cap US stocks while aligning with ESG principles.
• Attractive expense ratio compared to peers.
• Outperformed benchmarks but competition in the ESG mid-cap space is rising.

Risks:

• Market volatility: Mid-cap stocks can be more volatile than large-cap stocks.
• Tracking error risk: Performance may deviate from the benchmark.
• ESG considerations: The selection process could exclude attractive investment opportunities if evaluated solely on ESG parameters.

Who Should Consider Investing:

• Investors seeking:
  • Mid-cap US stock market exposure.
  • Adherence to ESG principles within their portfolio.
  • Lower expense ratios.
• Tolerance for:
  • Potential for higher volatility than large-cap stocks.
  • Tracking error risk.

Fundamental Rating Based on AI:

• 7.8 out of 10.

Justification:

• Positive factors contributing to the rating: strong financial performance, competitive expense ratio, and first-mover advantage in mid-cap ESG.
• Areas for improvement: market share within the category and potential over-reliance on passive tracking as competition intensifies.

Resources:

• DWS: https://www.dws.com/us-en/en/investments/equity-etfs/xtr-sp_md400_esg_eqt.html
• ETF.com: https://etf.com/etf/dbx
• Zacks: https://www.zacks.com/funds/etf/dbx/db-x-trackers-sp-mdcap-400-esg-index-fund

Disclaimer:

This analysis is for informational purposes only and does not constitute investment advice. Please consult with a qualified financial professional before making any investment decisions.