Xtrackers II EUR Overnight Rate Swap UCITS ETF 1C (XEON)

Overview

Xtrackers II EUR Overnight Rate Swap UCITS ETF 1C is a strategically designed exchange-traded fund that offers investors the opportunity to gain exposure to short-term eurozone interest rates through the method of synthetic replication. Established on May 25, 2007, and located in Luxembourg, this ETF tracks the performance of the Solactive €STR +8.5 Daily Total Return Index. This index is engineered to mirror the performance of a deposit that earns the Euro Short-Term Rate (€STR) while also incorporating daily reinvested interest together with an adjustment of 8.5 basis points. In a significant evolution, the ETF transitioned its benchmark from the Deutsche Bank EONIA Total Return Index to the €STR in November 2023, aligning itself with the official successor of EONIA. Managed by DWS, this fund utilizes total return swaps for its replication, highlighting its commitment to providing a cost-effective investment solution with a competitive total expense ratio of just 0.10% p.a. Furthermore, the ETF follows an accumulating distribution policy, reflecting its strategy of enhancing shareholder value. With assets under management surpassing €18 billion, the fund maintains a diverse portfolio, including swap contracts and collateral investments in government bonds issued by Belgium, the European Union, and France. Its position in the fixed income market is vital, acting as a low-volatility cash equivalent, making it an optimal choice for both institutional and retail investors looking to secure their funds within the Eurozone while benefiting from overnight rate exposure, especially during periods of variable monetary policies.

Products and Services

• Exchange-Traded Fund (ETF)

  The Xtrackers II EUR Overnight Rate Swap UCITS ETF 1C is designed to provide investors with a simplified access point to short-term interest rates in the Eurozone. By trading on an exchange, this ETF offers liquidity and transparency, enabling investors to buy and sell shares easily within market hours.

• Synthetic Replication

  This fund employs synthetic replication through the use of total return swaps, enabling it to effectively track the Solactive €STR +8.5 Daily Total Return Index. This method allows investors to gain exposure to underlying assets without direct ownership, enhancing flexibility and efficiency in portfolio management.

• Accumulating Distribution Policy

  The ETF follows an accumulating distribution policy, meaning that the returns generated from interest are reinvested into the fund rather than distributed to investors as dividends. This strategy is aimed at maximizing the compound effect of returns over time, appealing particularly to long-term investors.

• Low Total Expense Ratio

  With a competitive total expense ratio of 0.10% p.a., the fund is structured to minimize costs for investors, thus allowing them to retain a larger portion of their returns. This feature is particularly attractive for both retail and institutional investors who are conscious of management fees impacting overall performance.

• Diverse Asset Holdings

  The ETF holds a robust portfolio that includes not only swap contracts but also collateral in high-quality government bonds from countries such as Belgium, France, and entities like the European Union. This diversified approach helps mitigate risk while providing stability and liquidity to the fund.