Deka ETF expands its sustainable thematic offering with an ETF that tracks the STOXX Future Water ESG Index. The fund has been tradable on Xetra and other German stock exchanges since 13 January.
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Thomas Pohlmann, Head of ETF Product Management at Deka
Deka ETF expands its sustainable thematic offering with an ETF that tracks the STOXX Future Water ESG Index. The fund has been tradable on Xetra and other German stock exchanges since 13 January.
Technical characteristics of the fund
The ETF, called Deka STOXX Future Water ESG UCITS ETF, has ISIN DE000ETFL656 and WKN ETFL65. It uses physical replication of its benchmark index and the income is reinvested (accumulation).
- Current costs (TER): 0.55% per annum.
- Initial assets: €5.2 million (as at 13 January 2026).
- SFDR classification: Article 8, indicating that it integrates sustainability criteria into its investments.
The Underlying Index Methodology
The ETF replicates the performance of the STOXX Future Water ESG Index. The index construction methodology combines two selection criteria to identify companies operating in the water sector from a universe of developed countries:
- Revenue-based criterion: includes companies that generate at least 25% of their revenue from activities directly related to water.
- Patent-based criterion: includes companies that rank in the top 10% in terms of the number of high-quality patents in six defined water technologies (such as treatment and management) or that have at least 30% of their patents specialised in these areas.
This selection is followed by an ESG screening that excludes companies involved in human rights controversies, with high carbon emissions, involved in controversial weapons or in violation of other regulations. The index had 59 constituents as of 30 December 2025. The weighting of stocks in the index is determined by their free-float-adjusted market capitalisation and their “thematic exposure” to water (revenue or patent specialisation). There is a 10% cap on the weighting of any single stock.
Market Context and Positioning
The water-themed investment sector is well established. Morningstar estimates that there are around 50 funds and ETFs exposed to this theme in Europe. According to market analysis, ETFs in this sector have performed well in recent years, with a 5-year return of around +46% (data up to June 2024).
Analysis of Pros and Cons
Distinctive features:
- Hybrid methodology: The approach, which combines revenue and patent analysis, seeks to identify not only current market leaders but also potential technological innovators.
- Targeted thematic focus: Weighting that takes into account exposure to water aims to increase the “thematic purity” of the portfolio compared to an index based solely on capitalisation.
- Competitive costs: The TER of 0.55% is in the lower-middle range compared to direct competitors.
Considerations and risks:
- Small initial size: Assets under management are currently modest (€5.2 million), which is common for new launches and can sometimes affect liquidity in the early stages.
- Sector and geographical concentration: Like all thematic ETFs, the fund is exposed to the specific risks of its sector (e.g. regulation, technological developments). The index is composed of companies from developed markets, with likely heavy exposure to the United States and Europe.
- Volatility: Thematic ETFs on specific sectors tend to be more volatile than a broadly diversified global equity portfolio.
Thomas Pohlmann, Head of ETF Product Management at Deka, said: ‘Water is one of the most precious and scarce resources of our time. With this ETF, we enable investors to participate in the opportunities offered by this theme, while taking sustainable investment criteria into account.’
In summary, the Deka STOXX Future Water ESG UCITS ETF is intended as a tool for investors who want to access the global water management theme, with a methodology that aims to select both established operators and innovative companies, in accordance with sustainability criteria.
Source : ETFWorld.co.uk
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