DWS Lists Two New Xtrackers MSCI USA Swap II UCITS ETFs on the London Stock Exchange

DWS has admitted two new Xtrackers ETFs to trading on the London Stock Exchange, expanding its swap-based range for UK and international investors seeking cost-efficient exposure to US equities.

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Article created by the editorial staff of ETFWorld.co.uk

Simon Klein, Global Head of Xtrackers Sales at DWS

The Xtrackers MSCI USA Swap II UCITS ETF 1C (ISIN: IE000PDUVTF3) and the Xtrackers MSCI USA Swap II UCITS ETF 1D (ISIN: IE000FW16TX1) began trading on the LSE on 1 May 2026. Both carry a total expense ratio (TER) of 0.04% per annum, making them among the most competitively priced vehicles for MSCI USA exposure available to European investors.

The two funds were launched on 18 March 2026 and are domiciled in Ireland under the Xtrackers (IE) plc umbrella, an open-ended UCITS investment company with segregated liability between compartments. DWS Investment S.A. acts as management company. The funds are denominated in USD.

What These ETFs Track

Both funds aim to replicate the performance of the MSCI USA Index, which is designed to measure the performance of the large and mid cap segments of the US equity market. With 538 constituents, the index covers approximately 85% of the free float-adjusted market capitalisation in the US. Constituent weightings are determined by relative free-float adjusted market capitalisation. The index is administered by MSCI Limited, calculated on a total return net basis — meaning dividends and distributions are reinvested after the deduction of withholding taxes — and reviewed and rebalanced on a quarterly schedule, with additional rebalancing permitted to reflect corporate events such as mergers and acquisitions.

Synthetic Replication via Unfunded Swap

Both funds use synthetic replication — specifically an unfunded swap structure — to track the index. Rather than holding the underlying index constituents directly, each fund invests in a basket of transferable securities and enters into derivative contracts (swaps) with one or more counterparties. The swap delivers the return of either the net or gross total return version of the index (the “swap index”), at the Investment Manager’s discretion. The gross total return version assumes all dividends and distributions are reinvested before tax.

Xtrackers Swap ETFs are built on a multi-counterparty model, designed to diversify exposure, enhance resilience and ensure counterparty risk remains tightly controlled. The synthetic structure can offer structural efficiency and tighter tracking, particularly for indices with significant US equity content, as swap-based replication avoids certain frictions associated with direct securities ownership, including dividend withholding tax drag.

The prospectus documents note that transaction costs, taxes, unexpected fund costs, and market conditions — including volatility and liquidity — may affect tracking precision. The anticipated level of tracking error in normal market conditions is 1%.

The 1C and 1D Share Classes

The two LSE-listed funds differ in their dividend treatment, addressing different investor preferences within a single strategy.

Xtrackers MSCI USA Swap II UCITS ETF 1C (ISIN: IE000PDUVTF3, WKN: DBX0YK) is an accumulating share class. Returns and gains are not distributed to investors but are reinvested within the fund, which causes the net asset value per share to compound over time. This structure is typically preferred by investors focused on long-term capital growth, as it defers the tax event associated with income distributions.

Xtrackers MSCI USA Swap II UCITS ETF 1D (ISIN: IE000FW16TX1, WKN: DBX0YL) is a distributing share class. The fund pays out income on a quarterly basis, which may suit investors who require regular cash flows from their equity holdings, including income-oriented portfolios and certain pension or fund-of-funds structures.

Both share classes carry an identical TER of 0.04% per annum.

Distinction from the Existing Xtrackers MSCI USA Swap Range

DWS already operates established swap-based MSCI USA ETFs on the LSE — the Xtrackers MSCI USA Swap UCITS ETF 1C (ticker: XMUD.L) and the Xtrackers MSCI USA Swap UCITS ETF 1D (ticker: XUSD.L) — which have been trading since 2007. The new “Swap II” funds are distinct legal share classes with separate ISINs and WKNs, launched under the Xtrackers (IE) plc structure incorporated in Ireland, as opposed to the older Luxembourg-domiciled vehicle. The “II” designation is not a sequential version update but reflects the separate fund umbrella. Both the original and the new series track the same MSCI USA Index and use synthetic replication, but they are separate UCITS funds with their own NAVs, swap arrangements, and regulatory documentation.

DWS’s Broader LSE Expansion in 2026

The listing of these two funds is part of a broader wave of new Xtrackers admissions to the LSE this year. On 24 April 2026, DWS expanded its Xtrackers range with the admission of four new equity ETFs to trading on the London Stock Exchange. Those four funds included the Xtrackers FTSE All-World UCITS ETF, the Xtrackers FTSE All-World ex US UCITS ETF, the Xtrackers MSCI World IMI UCITS ETF, and the Xtrackers Electrification Technologies & Smart Grid UCITS ETF.

In March 2026, DWS also introduced unlisted institutional share classes for selected synthetic ETFs using swap-based replication to track indices including the S&P 500, MSCI USA, MSCI Emerging Markets, and MSCI World, expanding the ways UK investors and platforms can access these strategies.

Cost Positioning

At 0.04% per annum, both Swap II share classes are priced at the competitive end of the UCITS market for US large and mid cap equity exposure. The existing physically replicated Xtrackers MSCI USA UCITS ETF 1C, which has accumulated assets of approximately €10 billion, carries a TER of 0.03%. The additional one basis point for the swap-based structure reflects the cost of the derivative arrangement, offset in part by the potential tax efficiency of synthetic replication for investors subject to withholding tax on US dividends.

Key Product Data

Investor Considerations

Both funds are passively managed UCITS vehicles. As with all synthetic ETFs, investors are exposed to counterparty risk — the risk that a swap counterparty fails to meet its obligations — though this is mitigated by UCITS counterparty exposure limits and the multi-counterparty model used by Xtrackers. The funds do not hedge currency risk; they are denominated in USD, so UK-based investors holding sterling will bear USD/GBP exchange rate exposure.

The LSE listing gives UK and international investors access to these funds through standard brokerage accounts in the same way as any exchange-listed security, with intraday pricing and the liquidity support of authorised participants and market makers.

Source: ETFWorld.co.uk