DWS, one of Europe’s biggest asset management firms, has announced the launch of a new series of Xtrackers Exchange Traded Funds (ETFs), offering investors a novel way to invest in euro-denominated corporate bonds. This innovative range is designed to provide both regular quarterly distributions and a payout of remaining fund assets upon maturity.
The new Luxembourg-domiciled Xtrackers II Target Maturity EUR Corporate Bond Ucits ETFs will be listed on Deutsche Börse in Frankfurt. They are set to mature sequentially in 2027, 2029, 2031, and 2033. These products are a response to the current rise in interest rates, which has enhanced the appeal of bond investments. DWS said they allow investors to capitalise on high interest rates over the next few years while enjoying the traditional benefits of ETFs such as diversification, liquidity, and trading ease.
Tracking Bloomberg MSCI indices
The ETFs are structured to track the performance of various Bloomberg MSCI indices. Each index comprises hundreds of investment-grade, euro-denominated corporate bonds with similar maturity dates. Notably, the ETFs exclude bonds that fail to meet specific environmental, social, or governance (ESG) criteria, aligning with contemporary responsible investing trends.
Taking the Xtrackers II Target Maturity EUR Corporate Bond September 2027 Ucits ETF as an example, it includes bonds maturing between October 2026 and September 2027. During this period, proceeds from maturing bonds are transitioned monthly into low-risk euro money market securities. Following the maturity of all bonds, the ETF will be liquidated, and investors will receive the remaining fund assets.
The four new Xtrackers II EUR Corporate Bond Ucits ETFs offer distributing share classes, enabling investors to benefit from the current higher interest rate level through quarterly distributions. The ETFs are described as cost-efficient with a flat fee of 0.12 percent.