Xtrackers Emerging Markets Carbon Reduction and Climate Improvers ETF (EMCR) seeks to track an index that measures emerging market companies with lower carbon emissions and improving climate practices. This ESG-focused equity ETF targets developing nations across Asia, Latin America, and other emerging regions while emphasizing environmental sustainability criteria.
How It Works
The fund uses a passively managed approach that screens emerging market stocks based on carbon intensity metrics and climate improvement trajectories. Companies are weighted by market capitalization after applying ESG filters that exclude high-carbon emitters and favor firms with declining emissions or green business models. Rebalancing occurs quarterly to maintain index alignment and incorporate updated sustainability data. Holdings span multiple emerging market countries with concentration in larger, more liquid stocks that meet environmental criteria.
Key Features
- Combines emerging markets exposure with climate-focused screening, targeting companies reducing carbon footprints or improving environmental practices
- High dividend yield of 6.66% reflects emerging market income characteristics while maintaining sustainability focus
- Launched in 2018 during early ESG adoption, providing established track record in climate-conscious emerging market investing
Risks
- This ETF can lose value when emerging market currencies weaken against the dollar, potentially amplifying losses by 10-20% beyond local stock declines
- ESG screening reduces diversification by excluding entire sectors like traditional energy, creating concentration risk in remaining climate-friendly industries
- Emerging markets can decline 40-60% during global crises due to capital flight, political instability, and reduced commodity demand affecting these economies
Who Should Own This
Best suited as a satellite holding (5-15% of equity allocation) for ESG-conscious investors with 7+ year time horizons seeking emerging market exposure. High risk tolerance required due to emerging market volatility and currency fluctuations. Appeals to investors prioritizing climate impact alongside potential for higher long-term growth from developing economies.