DWS has launched three new Xtrackers ETFs writing that the products offer new opportunities for investing with equity factors using innovative approaches.
“These equity factors are characteristics of equities that exhibit improved risk/return patterns over long periods of time and in many markets. Well-known equity factors include value (low-priced stocks), size (smaller companies), and low volatility (stocks with low price fluctuations).
“The new Xtrackers ETFs represent a further development of portfolio strategies that invest specifically in stocks based on certain factors. What all products have in common is that the broad US stock index S&P 500 forms their investment universe.”
The Xtrackers S&P 500 Market Leaders UCITS ETF brings together the 50 companies that are market leaders in their segment. A portfolio of such companies is strongly focused on the factor of quality/profitability and, historically, has delivered solid performance even in periods of declining growth, the firm says.
The Xtrackers S&P 500 GARP UCITS ETF, on the other hand, tracks an index that includes the 100 stocks from the S&P 500 that meet the criteria of strong growth and favourable/moderate valuation (Growth at a Reasonable Price, or GARP for short).
Focused on the style factors of growth (growth stocks) and value (value-oriented stocks), experience shows that such a portfolio achieves above-average performance in times of increasing growth rates, the firm says.
Finally, the Xtrackers S&P 500 Defensive Shareholder Yield UCITS ETF focuses on shareholder yield. This term encompasses not only dividends, but all cash returns from a company to its owners. These can be share buybacks or a reduction in net debt, which affects interest expenses and risk. Compared to a pure dividend strategy, aligning a portfolio with the shareholder yield factor is a broader approach. This is because it also takes into account companies that do not pay dividends but have high buybacks. Historically, this strategy has delivered good investment results, especially in highly volatile and downward-trending markets, particularly when inflation rates are rising.
“With the new Xtrackers ETFs, we offer innovative investment approaches that go beyond traditional factor investing. For investors, these ‘Factor 2.0’ strategies offer new opportunities for diversification, but also for strategic positioning in different market phases,” says Simon Klein, Global Head of Xtrackers Sales at DWS. The annual flat fee for the products is 0.25 per cent.
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