German asset manager DWS has launched a new exchange-traded fund (ETF) that provides exposure to mid- and large-cap US equities aligned with the objective of transforming economies to net zero.
Listed on the New York Stock Exchange, Xtrackers Net Zero Pathway Paris Aligned US Equity ETF tracks the Solactive ISS ESG United States Net Zero Pathway Enhanced Index.
Consisting of 386 US stocks, the Paris Aligned Benchmark (PAB) index is designed to provide a 50% reduction in carbon intensity, versus a market capitalization-weighted US equity index, and a carbon intensity reduction trajectory of 7% year-on-year. It is aligned with the Paris climate agreement, which aims to achieve a net-zero emissions economy by 2050 and limit the rise in global temperature by 1.5°C above pre-industrial levels.
In addition to meeting PAB regulations, the index also aims to comply with recommendations published by the Institutional Investors Group on Climate Change (IIGCC), specifically its Net Zero Investment Framework.
The ETF has a gross/net expense ratio of 0.10% per annum, though subject to change. Its launch augments the US$4.2 billion line-up of ESG and climate-focused Xtrackers ETFs in the United States.