Why does x-trackers MSCI Emerging Markets ESG UCITS ETF (XDEX) outperform an emerging markets index? 10 December 2022 at 5:41PM in Savings & investments 7 replies 425 views

aroominyork

Can anyone throw some light onto why XDEX has massively outperformed the emerging markets index over the last five years, gaining 43.55% compared to, say, Fidelity Index Emerging Markets' 7.94%? The ESG screen does not seem to affect the top ten holdings much; most are the same even if the ETF holds a slightly larger amount of the top few holdings.

Linton

Where are you getting your data from? The data on Trustnet charting looks wrong as the xtrackers graph follows the msci global index very closely until recently. If you look on the ft website you will see returns close to the fidelity em etf.

It may be relevant that XDEX in the form of XDEX.L appears to be the symbol for a global tracker.

Morningstar seems tonshow the fund has only been around for a year or so. So confusion everywhere.

EthicsGradient

Linton said:

Where are you getting your data from? The data on Trustnet charting looks wrong as the xtrackers graph follows the msci global index very closely until recently. If you look on the ft website you will see returns close to the fidelity em etf.

It may be relevant that XDEX in the form of XDEX.L appears to be the symbol for a global tracker.

Morningstar seems tonshow the fund has only been around for a year or so. So confusion everywhere.

It looks like they changed a global tracker sub-fund to an ESG one earlier this year, and some sites have shortened the history to just the new period, while others have kept it all:

DWS is switching the index and strategy on its global ex UK ETF to one that tracks emerging markets with an ESG screen.
The Xtrackers FTSE All-World ex UK UCITS ETF (XDEX) is set to move from tracking the FTSE All-World ex UK index to the MSCI EM Select ESG Screened index and will be renamed the Xtrackers MSCI Emerging Markets ESG Screened UCITS ETF under the same ticker.
As well as switching to an ESG focused index, the change marks a complete overhaul for XDEX which has been one of the biggest players in the ESG switching frenzy over the past year.
The ETF will completely ditch its 61.1% holding of US securities while upping its weight in China from 3.2% to 32%. Elsewhere, Taiwan will become the second-largest weighting (17.5%) followed by South Korea (12.5%) and India (12.1%).

https://www.etfstream.com/news/dws-pushes-ahead-with-delayed-index-switch-on-global-ex-uk-etf/

Johnjdc

I can't replicate this disparity either. I'm going with either the oracle error suggested above, or that somehow one of the comparators is being measured with dividends reinvested and the other with dividends paid out.

aroominyork

EthicsGradient said:

Linton said:

Where are you getting your data from? The data on Trustnet charting looks wrong as the xtrackers graph follows the msci global index very closely until recently. If you look on the ft website you will see returns close to the fidelity em etf.

It may be relevant that XDEX in the form of XDEX.L appears to be the symbol for a global tracker.

Morningstar seems tonshow the fund has only been around for a year or so. So confusion everywhere.

It looks like they changed a global tracker sub-fund to an ESG one earlier this year, and some sites have shortened the history to just the new period, while others have kept it all:

DWS is switching the index and strategy on its global ex UK ETF to one that tracks emerging markets with an ESG screen.
The Xtrackers FTSE All-World ex UK UCITS ETF (XDEX) is set to move from tracking the FTSE All-World ex UK index to the MSCI EM Select ESG Screened index and will be renamed the Xtrackers MSCI Emerging Markets ESG Screened UCITS ETF under the same ticker.
As well as switching to an ESG focused index, the change marks a complete overhaul for XDEX which has been one of the biggest players in the ESG switching frenzy over the past year.
The ETF will completely ditch its 61.1% holding of US securities while upping its weight in China from 3.2% to 32%. Elsewhere, Taiwan will become the second-largest weighting (17.5%) followed by South Korea (12.5%) and India (12.1%).

https://www.etfstream.com/news/dws-pushes-ahead-with-delayed-index-switch-on-global-ex-uk-etf/

Very curious that they keep the same ticker for an ETF that moved from being global ex-UK to emerging markets. There are probably people still unaware they own a completely different investment from the one they bought.

aroominyork

As an aside, if anyone is nervous about China being the main component of their emerging markets index fund - or just does not want to invest in China - iShares has an EM ex-China ETF, ticker EXCS.

mebu60

aroominyork said:

As an aside, if anyone is nervous about China being the main component of their emerging markets index fund - or just does not want to invest in China - iShares has an EM ex-China ETF, ticker EXCS.

I was unable to find anything on EXCS but did come across ONIU relating to iShares EM ex-China.

If you could advise the difference / where I should be looking that would be appreciated. 

Many thanks. 

aroominyork

mebu60 said:

aroominyork said:

As an aside, if anyone is nervous about China being the main component of their emerging markets index fund - or just does not want to invest in China - iShares has an EM ex-China ETF, ticker EXCS.

I was unable to find anything on EXCS but did come across ONIU relating to iShares EM ex-China.

If you could advise the difference / where I should be looking that would be appreciated. 

Many thanks. 

https://www.hl.co.uk/shares/shares-search-results/i/ishares-msci-em-ex-china-ucits-etf-usd-acc EXCS