Asset manager DWS has launched the Xtrackers MSCI World ex USA Ucits ETF for European investors, marking the first time they can access the MSCI World Index while excluding the US equity market.
This ETF, which debuted on the London Stock Exchange on March 15 following its listing on the German Stock Exchange a day prior, is designed for investors seeking exposure to the global equity market but who wish to make their allocation to the US equity market separately.
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The ETF tracks the MSCI index, representing approximately 30% of global market capitalisation and spanning 22 industrialised countries. According to the asset manager, it facilitates streamlined regional allocation across Japan, Asia-Pacific and Europe, with the inclusion of Canada and Israel.
The ETF reinvests income from its constituent companies and its annual flat fee is 0.15%.
“The weighting of US equities in global portfolios has increased significantly in recent years. With a view to more balanced diversification, it could therefore make sense for investors to segment their US exposure from the rest of the global equity portfolio,” says Simon Klein, global head of Xtrackers sales at DWS. “This would create room to adjust the US equity component more granularly depending on risk preference.”
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The dominance of certain US growth stocks, often referred to as the “Magnificent Seven” – including Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla – underscores the need for granular adjustment of US equity exposure based on risk preferences, he highlighted. As these stocks collectively hold a weight of over 19% in the MSCI World Index, a considerable portion of the index is concentrated in a handful of companies within the same sector.
