Blog Posts — April 22, 2020

New ETF Tracks DAX 50 ESG Index

Qontigo has licensed the new DAX® 50 ESG Index to Lyxor Asset Management as an underlying for an exchange-traded fund that was listed on the Frankfurt Stock Exchange today.

The DAX 50 ESG Index was introduced in March as a new standard for the growing pool of investors integrating environmental, social and governance (ESG) principles into their investment approach and looking for a pertinent liquid German equity benchmark. The new index excludes companies in breach of ethical standards or engaged in controversial activities, and additionally integrates ESG scoring into stock selection.

“We are very pleased that Lyxor has selected the DAX 50 ESG Index for their new ETF,” said Stephan Flaegel, Global Head of Indices & Benchmarks at Qontigo. “With its robust framework and transparent methodology, the DAX 50 ESG Index is a liquid representation of the German equity market that enhances the sustainable profile of a portfolio.”

The new ETF adds to Lyxor’s offering of German-focused ETFs, which track, among others, the DAX®MDAX®SDAX® and TecDAX® indices.

Focus on sustainability and replicability

The DAX 50 ESG Index is derived from the universe of the HDAX® Index, which groups all equities that belong to either the DAX, MDAX or TecDAX indices.

Companies are firstly excluded if Sustainalytics deems them to be non-compliant with the Global Standards Screeningassessment, or involved in controversial weapons,tobacco production, thermal coal (extraction and power generation), nuclear power or military contracting.

The DAX 50 ESG Index is composed of the 50 remaining stocks with the highest rank in three parameters: trading volume, free-float market capitalization and ESG score. The latter is calculated by Sustainalytics’ transparent ESG performance rating model.

The methodology and number of index constituents means the resulting portfolio has a sufficiently large investment capacity while offering replicability from a tradability and liquidity perspective.

Please visit our recent post for more information on the index. For a full description of the selection methodology and the review calendar, please click here. For a Qontigo research study published earlier this month, analyzing the portfolio composition and returns of the DAX 50 ESG Index, click here.

Featured indices
DAX® 50 ESG Index

Global Standards Screening identifies companies that violate or are at risk of violating commonly accepted international norms and standards, enshrined in the United Nations Global Compact (UNGC) Principles, the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights (UNGPs), and their underlying conventions.
The following weapons are considered controversial: anti-personnel mines, biological and chemical weapons, cluster weapons, depleted uranium, nuclear weapons and white phosphorus weapons.