As America’s technological lead over its geopolitical opponents diminishes, investors are seeking ways to ensure that the free world remains ahead in the race for technological supremacy. To address this growing concern, DWS has recently launched a custom-made exchange-traded fund (ETF) called the Xtrackers US National Critical Technologies ETF. This ETF, listed on the New York Stock Exchange under the symbol “CRTC,” tracks large and midcap companies that are involved in developing critical emerging technologies for the U.S. and its allies.
The U.S. Department of Defense has identified 14 key tech areas crucial to national security, and companies included in the CRTC holdings must be involved in at least one of these areas. While some of these areas, such as hypersonics and directed energy weapons, are primarily intended for military use, many are also being developed by private companies for enterprise and consumer applications. These include next-gen wireless communications, microelectronics, and human-machine interfaces.
The companies within these sectors are evaluated for their geostrategic risk and assigned a score based on their relative exposure and risk. The CRTC fund incorporates a geostrategic risk rating that assesses risks on different levels. This allows investors to gain exposure to sectors and companies aligned with strategically important technologies while fortifying their investments against certain geostrategic interdependencies.
The top holdings in the CRTC fund include Alphabet, Microsoft, Chevron, and other American giants. However, the fund also includes a diverse range of smaller holdings that reveal the international footprint of U.S. strategic mapping. These holdings span across various countries, such as Australia, Canada, the United Kingdom, Japan, and even New Zealand.
With the erosion of the post–Cold War international order and the resurgence of geopolitical risk, investors are increasingly aware of the potential impact on global economic activity. Numerous multinational companies are seeking geopolitical risk services to navigate these challenges. As investors look for ways to manage geopolitical risks, custom ETFs like CRTC offer strategic investment opportunities that align with emerging demand.
The Xtrackers U.S. now offers a total of 44 funds, with CRTC being one of the six launched this year. The expense ratio for the CRTC fund stands at 35 basis points.
Frequently Asked Questions (FAQ)
What is an ETF?
An ETF, or exchange-traded fund, is a type of investment fund and exchange-traded product that represents a diversified portfolio of securities. It is traded on stock exchanges, similar to individual stocks.
What are critical emerging technologies?
Critical emerging technologies refer to technological advancements in specific areas that are considered crucial for national security and economic competitiveness. These technologies often have significant implications for various industries and may include sectors such as artificial intelligence, cybersecurity, biotechnology, and clean energy.
How is geostrategic risk assessed?
Geostrategic risk is assessed by evaluating the potential risks and vulnerabilities associated with a company’s exposure to geopolitical factors and events. It involves analyzing factors such as political stability, regional conflicts, trade relations, and regulatory environments to determine the impact on a company’s operations and investments.