DWS launches an ETF that gives European investors access to the MSCI World index excluding US equities for the first time

DWS has launched a new Xtrackers ETF that offers European investors the opportunity to invest in the MSCI World index for the first time, deliberately excluding the US equity market. The Xtrackers MSCI World ex USA UCITS ETF began trading on the London Stock Exchange last Friday, following its presentation on the German Stock Exchange on March 14th.

The new ETF is designed for investors seeking exposure to the global equity market, but who wish to make their allocation to the US equity market separately.

Introducing the Xtrackers MSCI World ex USA UCITS ETF

The Xtrackers MSCI World ex USA UCITS ETF follows the corresponding index from provider MSCI, which reflects around 30% of the global market capitalization and comprises companies from 22 industrialized countries. It allows for a simplified allocation of various regional exposures: Japan, Asia-Pacific, and Europe. It should be noted that, even with the corresponding portfolio components for these regions, countries like Canada or Israel are not covered. However, these countries are included in the Xtrackers MSCI World ex USA UCITS ETF. The ETF reinvests the income from the companies it contains and its annual fixed fee is 0.15%.

The weighting of US equities in global portfolios has significantly increased in recent years. Therefore, with a view to more balanced diversification, it might make sense for investors to segment their exposure to the US from the rest of the global equity portfolio. This would create room to adjust the US equity component more granularly based on risk preferences.

Simon Klein, Global Head of Sales at Xtrackers DWS

The US currently represents around 70% of the MSCI World index weighting. This market has been greatly driven by the performance of the so-called `Magnificent Seven´, a term used to describe the stocks of US growth companies Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla. These seven stocks now have a weighting of more than 19% in the MSCI World index (as of the end of February), which means that almost a fifth of the MSCI World index weighting corresponds to a few stocks from the same sector.