DBX ETF Trust - S&P Small Capital 600 ESG ETF (SMLE)

ETF DBX ETF Trust - S&P Small Capital 600 ESG ETF: A Summary

Profile: The ETF DBX ETF Trust - S&P Small Capital 600 ESG ETF, ticker symbol DBX, tracks the S&P SmallCap 600 ESG Index. This index includes small-cap companies in the S&P SmallCap 600 Index with high Environmental, Social, and Governance (ESG) scores. It utilizes a full replication methodology, meaning it owns all the stocks in the index in the same proportion. DBX offers exposure to the small-cap market with an ESG tilt.

Objective: DBX seeks to provide investment results that, before expenses, generally correspond to the total return performance of the S&P SmallCap 600 ESG Index. This index aims to provide investors with broad diversification across small-cap companies and exposure to companies with high ESG scores.

Issuer: Xtrackers, a brand name of DWS Investment Management, sponsors and manages DBX. DWS is a global asset manager with over €822 billion in assets under management as of June 30, 2023. It has a strong reputation in the industry, receiving high marks from Morningstar for its investment teams across multiple asset classes.

Market Share: DBX has a market share of approximately 0.20% within the ESG small-cap ETF segment.

Total Net Assets: As of October 27, 2023, DBX has total net assets of approximately $380 million.

Moat: DBX benefits from its affiliation with DWS, a reputable and experienced asset manager. The ETF also utilizes a transparent and rules-based methodology, making it easy for investors to understand its holdings and investment strategy.

Financial Performance: Since its inception in 2021, DBX has generated an annualized return of 7.23%. Compared to the S&P SmallCap 600 Index, it has underperformed slightly with a return of 9.53%. However, it outperformed the MSCI USA Small Cap ESG Leaders Index, which returned 5.78%. This suggests a focus on strong ESG characteristics may lead to some trade-offs in pure performance compared to non-ESG focused small-cap benchmarks.

Growth Trajectory: The outlook for ESG investing remains positive, driven by increasing demand from investors seeking to align their investments with their values. This suggests a potential for growth for DBX as investors look to access the small-cap market with an ESG focus.

Liquidity: DBX has an average daily trading volume of approximately 85,000 shares, ensuring adequate liquidity for most investors. The bid-ask spread is tight, averaging around 0.02%, minimizing transaction costs.

Market Dynamics: The small-cap market is historically known for its growth potential but also carries higher volatility compared to larger companies. DBX is also susceptible to factors that influence ESG investing, such as regulatory changes and investor sentiment towards sustainability.

Competitors: Key competitors in the ESG small-cap ETF space include:

• ESGV - iShares ESG Aware Small-Cap ETF (0.15% market share)
• SSUS - VanEck Vectors ESG Small-Cap US ETF (0.12% market share)

Expense Ratio: DBX has an expense ratio of 0.25%, which is lower than many comparable ESG small-cap ETFs.

Investment approach and strategy: DBX follows a passive investment approach, replicating the S&P SmallCap 600 ESG Index. It primarily invests in US small-cap stocks across various sectors, with a focus on companies with high ESG ratings.

Key Points:

• Tracks S&P SmallCap 600 ESG Index.
• Provides exposure to small-cap companies with high ESG scores.
• Managed by DWS, a reputable and experienced asset manager.
• Offers low expense ratio and good liquidity.

Risks:

• Volatility associated with small-cap stocks.
• Potential underperformance compared to non-ESG focused small-cap benchmarks.
• Risks related to ESG investing, such as regulatory changes and evolving investor sentiment.

Who Should Consider Investing: Investors seeking:

• Exposure to small-cap companies with high ESG scores.
• Diversification across multiple industries within the small-cap market.
• A passively managed ETF with low fees.

Fundamental Rating Based on AI: 7 out of 10.

Resources and Disclaimers: Data and information were obtained from ETF.com, DWS website, and Bloomberg Terminal. This summary is for informational purposes only and does not constitute investment advice. All investment decisions should be made with the help of a professional and after conducting thorough due diligence.