Overview of Changes#
Xtrackers, a Luxembourg-based investment company, has announced that it will remove environmental, social, and governance (ESG) screening criteria from 11 of its exchange-traded funds (ETFs) starting June 1, 2026. This decision will impact 10 sector-focused ETFs in Europe and one fund focused on emerging markets in Latin America.
Transition to Broader Indexes#
The affected funds will shift from using ESG-filtered indexes to broader MSCI indexes that do not apply these filters. This change means that the funds will move from Article 8 to Article 6 classification under the EU’s Sustainable Finance Disclosure Regulation, which governs how financial products are categorized based on their sustainability features.
Fund Details#
The specific funds impacted include those tracking sectors such as materials, health care, financials, communication services, information technology, utilities, consumer staples, and industrials. Additionally, the Xtrackers MSCI Pacific ex Japan Screened UCITS ETF and the Xtrackers MSCI EM Latin America ESG Swap UCITS ETF will also transition to non-screened indexes. The names of these funds will be simplified by removing terms like "Screened" and "ESG"; for example, the Xtrackers MSCI Europe Materials Screened UCITS ETF will simply be called the Xtrackers MSCI Europe Materials UCITS ETF.
Shareholder Information#
Xtrackers has stated that this transition aims to enhance diversification and provide broader market exposure for investors. Importantly, the fees associated with these funds will remain unchanged. Shareholders who disagree with the changes can redeem their shares without incurring redemption charges until May 31, 2026. However, while there are no redemption fees for secondary market sales, other costs may apply through intermediaries.