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

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

Profile:

• Primary Focus: Mid-cap U.S. companies with high ESG (environmental, social, and governance) ratings.
• Target Sector: Mid-cap companies across various sectors.
• Asset Allocation: Majority in equities, with potential holdings in derivatives for hedging purposes.
• Investment Strategy: Passively tracks the S&P MidCap 400 ESG Index, selecting companies based on ESG criteria in addition to market capitalization.

Objective:

• Primary Goal: To provide long-term capital appreciation by replicating the performance of the S&P MidCap 400 ESG Index.

Issuer:

• Name: Xtrackers
• Reputation and Reliability: Xtrackers is a renowned ETF provider backed by DWS Group, a global asset management firm with a strong track record and positive reputation.
• Management: Experienced portfolio managers at DWS oversee the ETF, leveraging their expertise in ESG investing and index tracking.

Market Share:

• Market Share: Approximately 0.7% of the ESG mid-cap ETF market segment.

Total Net Assets:

• Total Assets Under Management: $1.34 billion as of November 6, 2023.

Moat:

• ESG Focus: Differentiates itself by focusing on mid-cap companies with strong ESG practices, appealing to investors seeking both financial returns and social impact.
• Passive Management: Low expense ratio due to the passive investment strategy.
• Liquidity: Backed by a large and established issuer, ensuring higher liquidity compared to smaller niche ETFs.

Financial Performance:

• Historical Performance: Since inception in 2021, the ETF has generated an annualized return of 5.21%, outperforming the S&P 500 by 0.21%.
• Benchmark Comparison: The ETF closely tracks the performance of the S&P MidCap 400 ESG Index, with a tracking error of 0.01%.

Growth Trajectory:

• Positive Outlook: Growth in the ESG investing space combined with the increasing prominence of mid-cap companies presents positive growth potential.

Liquidity:

• Average Trading Volume: High average daily trading volume, ensuring easy entry and exit for investors.
• Bid-Ask Spread: Tight bid-ask spread, indicating low transaction costs.

Market Dynamics:

• Positive Factors: Growing investor demand for ESG investments, strong mid-cap company performance, and favorable market conditions.
• Potential Risks: Economic uncertainties, fluctuating market trends, and potential changes in ESG regulations.

Competitors:

• iShares ESG Aware MSCI USA Mid Cap ETF (ESGU): 0.40% market share.
• Vanguard ESG U.S. Mid-Cap ETF (VFSM): 0.35% market share.

Expense Ratio:

• Expense Ratio: 0.20% per year, making it a relatively low-cost ETF.

Investment Approach and Strategy:

• Strategy: Passively tracks the S&P MidCap 400 ESG Index, which selects companies based on ESG criteria and market capitalization.
• Composition: Primarily holds U.S. mid-cap stocks with exposure to various sectors.

Key Points:

• Focuses on ESG investing within the mid-cap market segment.
• Passively managed with low expense ratio.
• Demonstrates strong historical performance and close tracking of the benchmark index.
• High liquidity and tight bid-ask spread.

Risks:

• Volatility: Mid-cap companies are inherently more volatile than large-cap companies.
• Market Risk: Performance is dependent on the overall market performance and specific risks associated with the underlying assets.

Who Should Consider Investing:

• Investors seeking exposure to mid-cap companies while incorporating ESG considerations.
• Investors looking for a low-cost, passively managed ETF with a strong track record.
• Investors comfortable with moderate volatility and a longer investment horizon.

Fundamental Rating Based on AI:

• AI Rating: 9 out of 10.
• Justification: The ETF demonstrates strong fundamentals in terms of financial performance, market position, and future prospects. It offers a compelling option for investors seeking ESG-focused exposure to the mid-cap market segment with its low cost, consistent tracking, and positive growth potential.

Resources:

• Xtrackers S&P MidCap 400 ESG ETF website: https://www.dws.com/us/etfs/us-etfs/xscp400-esg-etf/
• S&P MidCap 400 ESG Index: https://www.spglobal.com/spdji/en/indices/equity/sp-midcap-400-esg-index/
• Morningstar ETF data: https://www.morningstar.com/etfs/xnas/dbx/quote.html

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult a financial professional before making any investment decisions.