Xtrackers MSCI EAFE Selection Equity ETF (EASG) seeks to track the MSCI EAFE ESG Universal Select Index, which measures the performance of large- and mid-cap stocks from developed markets in Europe, Australasia, and the Far East while applying environmental, social, and governance (ESG) screening criteria to exclude controversial companies.
How It Works
EASG uses a passively managed, market-capitalization-weighted approach that mirrors its ESG-screened benchmark index. The fund excludes companies involved in controversial weapons, tobacco, thermal coal, and oil sands, while overweighting firms with higher ESG scores relative to sector peers. Rebalancing occurs quarterly to maintain alignment with index changes and ESG criteria updates. The portfolio typically holds 400-500 international developed market stocks with reduced exposure to traditional energy and materials sectors.
Key Features
- Zero expense ratio makes it one of the most cost-effective ESG international equity ETFs available to investors
- Combines broad EAFE market exposure with ESG screening, excluding controversial industries while maintaining sector diversification
- Offers 2.57% dividend yield from international developed market companies with strong ESG profiles
Risks
- This ETF can lose value during international market downturns, potentially declining 40-50% in severe global recessions like 2008-2009
- Currency fluctuations between the U.S. dollar and foreign currencies can significantly impact returns, adding 5-15% annual volatility
- ESG screening may cause performance divergence from broader international markets during periods when excluded sectors outperform significantly
Who Should Own This
Best suited as a satellite holding (10-25% of equity allocation) for ESG-conscious investors with 5+ year time horizons seeking international developed market exposure. Medium-to-high risk tolerance required due to foreign equity volatility and currency exposure. Ideal for investors wanting to complement U.S. ESG holdings while maintaining ethical investment standards.