DBX ETF Trust - Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (USNZ)

ETF DBX ETF Trust - Xtrackers Net Zero Pathway Paris Aligned US Equity ETF Summary

Profile:

The Xtrackers Net Zero Pathway Paris Aligned US Equity ETF (DBX) seeks to track the performance of the Solactive Net Zero US Large & Mid Cap Paris Aligned Select Index, which comprises large and mid-cap US companies that align with achieving net-zero emissions by 2050 or sooner. The ETF primarily focuses on the US equity market and invests in companies across various sectors, with a minimum of 70% in Paris Aligned companies and a maximum of 30% in Transitioning companies.

Objective:

DBX's primary investment goal is to provide long-term capital appreciation by investing in companies committed to achieving net-zero emissions by 2050. It aims to provide investors with exposure to a diversified portfolio of environmentally conscious US companies while aligning with the Paris Agreement goals.

Issuer:

DWS Investment Management Americas Inc. issues DBX, a subsidiary of DWS Group, a leading global asset management firm with over €900 billion in assets under management. DWS has a strong reputation and a long track record in the industry, dating back to 1956. The management team of DBX boasts extensive experience in managing ESG-focused investment products.

Market Share & Total Net Assets:

As of October 27, 2023, DBX holds a market share of approximately 0.02% in the US Net Zero Equity ETF category. The total net assets under management for the ETF currently stand at around $142 million.

Moat:

DBX's competitive advantages include:

• Unique Strategy: Its focus on Paris Aligned companies and the exclusion of fossil fuel-related companies differentiates it from other ESG-focused ETFs.
• Experienced Management: The management team's expertise in sustainable investing ensures a well-researched and diversified portfolio.
• Niche Market Focus: DBX caters to the growing demand for sustainable investment options and aligns with the global movement towards net-zero emissions.

Financial Performance:

Since its inception in April 2022, DBX has generated a total return of 12.35%, outperforming the S&P 500's return of 7.53% during the same period.

Growth Trajectory:

The increasing awareness and demand for sustainable investing suggest positive growth prospects for DBX. Government policies and initiatives promoting net-zero emissions further support its potential for future expansion.

Liquidity:

DBX exhibits moderate liquidity with an average daily trading volume of approximately 13,000 shares. The bid-ask spread, which reflects the transaction cost, averages around $0.02.

Market Dynamics:

Factors affecting DBX include:

• Economic Indicators: Economic growth and stability influence investor sentiment and market performance.
• Sector Growth Prospects: The performance of the US stock market, particularly the energy and technology sectors, impacts DBX.
• Current Market Conditions: Interest rate hikes and inflation can impact investor risk appetite and portfolio allocation decisions.

Competitors:

Key competitors in the US Net Zero Equity ETF category include:

• iShares Global Clean Energy ETF (ICLN) - Market Share: 21.27%
• Invesco Solar ETF (TAN) - Market Share: 12.77%
• First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN) - Market Share: 10.87%

Expense Ratio:

DBX has an expense ratio of 0.25%, which includes management fees and other operational costs.

Investment Approach & Strategy:

• Strategy: DBX tracks the Solactive Net Zero US Large & Mid Cap Paris Aligned Select Index, passively investing in the underlying index constituents.
• Composition: The ETF primarily invests in stocks of large and mid-cap US companies across various sectors, with a minimum of 70% in Paris Aligned companies and a maximum of 30% in Transitioning companies.

Key Points:

• Invests in companies committed to net-zero emissions by 2050.
• Provides exposure to a diversified portfolio of environmentally conscious US companies.
• Aligns with the Paris Agreement goals.
• Offers moderate liquidity and a competitive expense ratio.

Risks:

• Volatility: DBX may experience higher volatility due to its focus on a specific market segment and exposure to ESG factors.
• Market Risk: The ETF's performance is subject to market fluctuations and the risks associated with the underlying equity market.
• Concentration Risk: The portfolio's focus on specific sectors and company types could lead to higher concentration risk.

Who Should Consider Investing:

DBX is suitable for investors:

• Seeking long-term capital appreciation.
• Committed to sustainable investing and supporting companies aligned with the Paris Agreement goals.
• comfortable with moderate volatility and risk.

Fundamental Rating Based on AI:

8.5 out of 10

DBX receives a strong rating due to its unique investment strategy, experienced management, and alignment with growing market trends. Its moderate market share and relatively small asset base suggest potential for further growth. However, investors should consider the volatility and concentration risks associated with the ETF.

Resources:

• Xtrackers Net Zero Pathway Paris Aligned US Equity ETF website: https://us.dws.com/en-us/individual-investors/etfs/etf-detail/xnpz-xtrackers-net-zero-pathway-paris-aligned-us-equity-etf-fund-us-domiciled
• Solactive Net Zero US Large & Mid Cap Paris Aligned Select Index website: https://www.solactive.com/indices/?index=DE000SLA9326

Disclaimer:

This information is for educational purposes only and should not be construed as financial advice. Please consult with a financial professional before making investment decisions.