Xtrackers Emerging Markets ETF to pivot to active management with fee hikes

Xtrackers (IE) plc announced plans to transition its Xtrackers MSCI Emerging Markets Climate Transition UCITS ETF into an actively managed fund, seeking mid-to-long-term capital appreciation rather than passive index replication. The proposed rebrand, Xtrackers Emerging Markets Equity Enhanced Active UCITS ETF, will adopt a low-active-share approach, meaning its portfolio composition will closely align with the benchmark but with discretionary adjustments for outperformance. The change will also shift the fund’s SFDR classification from Article 9(3)—which mandates carbon emission reduction as an objective—to Article 8(1), focusing instead on environmental and social characteristics without requiring material impact targets. ESG screening will persist, excluding companies with MSCI ESG ratings below CCC, those involved in controversial weapons, and those exceeding revenue thresholds in sectors like thermal coal mining, tobacco, or civilian firearms. The transition is set to take effect around November 6, 2026, contingent on approval from over 50% of shareholders at an extraordinary general meeting on October 23, 2026, held at 25 North Wall Quay, Dublin. The fund’s 1C share class will see fee increases: management fees rise from 0.06% to 0.10% annually, platform fees from 0.10% to 0.20%, and the total all-in fee climbing to 0.30% per annum. The investment manager, DWS Investment GmbH, will oversee the transition, with DWS Investments UK Limited managing the sub-portfolio and DWS International GmbH providing advisory services. The fund currently tracks the MSCI Emerging Markets Select Sustainability Screened CTB Index, but will use the MSCI Emerging Markets 10/40 Index as a performance benchmark for comparison purposes. ESG data providers Urgewald and MSCI ESG Research LLC will continue supporting the fund’s sustainability criteria.