LONDON - Xtrackers II, an investment company with variable capital based in Luxembourg, has announced significant changes to the ESG (Environmental, Social, and Governance) criteria for its ESG Global Government Bond UCITS ETF. Effective today, the fund will source its ESG data from an updated methodology, exclude countries with social violations, introduce a green bond tilt, and increase the minimum share of sustainable investments.
The FTSE ESG Select World Government Bond Index - DM, serving as the Reference Index for the Xtrackers II ESG Global Government Bond UCITS ETF, will now utilize the Sustainable Sovereign Risk Methodology (2SRM) for ESG scoring. This methodology is a more enhanced version than the previously used Beyond Ratings Sovereign Risk Monitor (SRM).
In addition to the ESG Scores and Freedom country inclusion criteria, the Reference Index will now also exclude countries that violate certain social standards as outlined in international treaties and conventions, United Nations principles, and national laws where applicable. This includes countries on the EU list of non-cooperative jurisdictions for tax purposes.
A new aspect of the index methodology is the introduction of a green bond tilt, ensuring that eligible bonds meet a specified minimum threshold within the Reference Index. This change aims to maintain the ESG-tilted country exposures while aligning the index duration with that of the Reference Index universe.
As a consequence of these changes, the Xtrackers II ESG Global Government Bond UCITS ETF will now invest a minimum of 5% of its assets in sustainable investments, an increase from the previous 0%. It should be noted that while the fund will invest in sustainable assets, it does not have sustainable investments as its primary objective.
Shareholders who do not find these changes aligned with their investment goals are entitled to redeem their shares without incurring a Redemption Charge, in line with the terms set out in the fund's prospectus.
The revised Prospectus, key information document, and the Pre-contractual Information on Sustainable Investments document reflecting these updates will be available on the Xtrackers website around the effective date. Shareholders are advised to seek independent financial advice if they have any queries or require clarification.
This announcement is based on a press release statement and aims to provide shareholders with essential updates regarding the Xtrackers II ESG Global Government Bond UCITS ETF.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.