ETF Ratings
XENIX currently qualitatively rates a total of 2,652 ETFs. In our view, these are all passively managed index ETFs (predominantly UCITS ETFs) in Europe as of August 2023.
No, not exclusively. Although the XENIX STARS ETF rating mainly takes into account UCITS ETFs that are launched and distributed within the European Union, it also includes, for example, Swiss ETFs as well as British index funds.
XENIX offers 100% coverage of all ETFs in the four largest ETF markets in Europe (DE, UK, IT and CH) and for the Nordic countries (DK, FI, IS, NO, SE).
XENIX is the only analysis house in Europe that offers a qualitative rating of almost all European ETFs that have a transparent benchmark index according to the sales prospectus and that are passively managed as special assets.
XENIX currently rates ETFs listed in more than a dozen countries in Europe. The focus of our rating offering is on ETFs with listings in Frankfurt, Zurich, Milan and London, where together more than 90% of all European ETFs are traded.
Yes, XENIX evaluates traditional index funds for the UK and the Nordic countries in addition to exchange-traded index funds (ETFs), because index funds are also publicly offered there for private investors complementary to ETFs and are popular.
In addition, we also value index-based crypto basket securities listed in Germany and Switzerland. However, these crypto basket ETPs are not legally special assets, but highly volatile baskets of securities with issuer risk and with crypto assets that contain special risks.
The XENIX STARS ETF database is an offer for financial service providers and banks and platform providers who, as intermediaries or investors, would like to be informed at any time, in a resource-saving and time-saving manner, which ETFs are the qualitatively best products in individual asset classes. Our business customers can access our ETF database online (e.g. via SFTP).
The results of our qualitative ETF rating are also published regularly as part of the XENIX ETF AWARDS for individual countries or in evaluations for public media.
The XENIX STARS ETF Rating is unique because it qualitatively evaluates an ETF at all levels of index investing (index, ETF and exchange trading). In addition, our holistic valuation approach takes into account the transparency and efficiency as well as the investment performance of an ETF compared to its benchmark index and peer group.
The XENIX STARS ETF evaluation is multi-dimensional and offers investors much more than a performance or cost comparison of ETFs. By taking into account sales prospectuses and other legally binding documents, our ETF rating also allows us to qualitatively compare newly launched ETFs with index products that have been established for some time.
We believe that exchange-traded index funds (ETFs) offer clear added value for private investors, especially as indexed, market-matching and passively managed investment products.
Therefore, we distinguish the three product categories basic ETFs, satellite ETFs and specialist ETFs. This allows us to inform ETF investors in detail for each asset class and underlying investment segments which ETFs are true underlying ETFs. Licensees of our ETF database can thus directly find basic ETFs that can be used without restrictions as the foundation of a financial investment with ETFs or an ETF portfolio.
Currently, we classify only around one in four ETFs as basic ETFs, i.e. suitable as core investments within a portfolio strategy for private investors. The majority of ETFs offered in Europe are satellite ETFs, i.e. supplementary building blocks for portfolios. In our view, the best-known areas of satellite ETFs include sector ETFs, smart-beta ETFs, or even thematic ETFs or ETFs with rebalancing approaches.
Sustainable ETFs
ESG stands for Environment, Socialand Governance.
The abbreviation SRI(Socially Responsible Investing) and the terms “sustainability” or “socially responsible” are also used synonymously for sustainable ETFs.
Not every ETF that includes a sustainability-related term or environmental reference as part of its product name is also based on a true sustainability index. XENIX defines sustainable ETFs based on the underlying index and the EU Disclosure Regulation, which is important for private investors. XENIX only considers ETFs as sustainable investment products that firstly track an ESG index and secondly are classified by their providers themselves as Article 8 or 9 ETFs according to the EU Disclosure Regulation SFDR.
Our definition of sustainable ETFs is comprehensive by combining the two criteria of ESG index and minimum Article 8 ESG ETF. It provides intermediaries (such as asset managers and banks) with a legally compliant ETF selection for investment advisory clients who record a sustainability preference as part of the query and recording process.
At the level of ESG ETFs, we would like to mention just two filters by which we can currently classify (depending on which definition one uses) the approximately 800-1,000 sustainable ETFs in Europe in the broader sense:
Weighting filter
We distinguish between sustainability ETFs by market capitalization or ESG-weighted ETFs, where the weighting of individual securities is based on their “ESG strength”, i.e. the sustainability rating of the index provider.
Sustainable market-cap or ESG-weighted ETF?
This distinction is helpful for investors because ESG ETFs weighted by sustainability often have a significantly different index composition and also weighting of the individual index components than their source index. You could also say that they are concentrated sustainable investors, but as a result they are no longer composed of market capitalization.
Securities Lending Filter
Our ETF database can be used to filter out sustainability ETFs that do not engage in securities lending. Most providers already practice this, but still sustainability ETFs use or do not offer the option of “securities lending” for securities management. In our view, the basic rule for investors should be: Only a sustainability ETF that does not use securities lending can really offer a full physical replication of the specified ESG index.
ETF portfolios
Asset strategies based on XENIX qualitatively rated and selected ETFs. Thus, a Xenixfolio strategy is a general rules-based ETF portfolio strategy that combines our qualitative ETF rating with a mixed asset allocation to fixed income and dividend markets. A Xenixfolio strategy thus offers more than most ETF model portfolios published on comparison portals or occasionally in Sunday newspapers.
For strategies that we also publish, we prefer as few ETFs as possible: at least three or four ETFs from different ETF providers, up to a maximum of six or eight ETFs.
In the case of customized ETF portfolios for asset-managing limited liability companies or family offices, up to 20 ETFs can also be combined to form a Xenixfolio strategy.
Certification
Based on its ETF rating, XENIX awards quality seals to individual ETFs that have received at least four XENIX STARS on the last rating date. Excellent ETFs that carry a quality seal with four XENIX STARS offer investors excellent quality. They are therefore easy to identify as certified products, in an otherwise confusing ETF market for which few quality comparisons are otherwise available.
Based on the qualitative ETF rating, XENIX also awards quality seals for ETF portfolios, i.e. for asset strategies that are predominantly (or completely) implemented with index funds or ETFs. These ETF portfolios can be offered publicly as funds or funds of funds or as part of asset management mandates. XENIX evaluates the quality of the portfolio building blocks used (product quality) and the quality of the portfolio management in relation to the selected benchmark (allocation quality).
In simple terms, a quality seal containing four XENIX STARS means for an ETF (but also for an ETF portfolio) that this product is qualitatively above average and belongs to the currently around 30% qualitatively best products (this percentage varies depending on the type of asset class or investment segment).
In other words, excellent ETFs or ETF portfolios that carry a quality seal with four XENIX STARS offer excellent quality and are each among the best products in their comparison categories. XENIX Quality Seal for ETFs or ETF portfolios thus offers investors verified product excellence.
The evaluation process at the XENIX Seal of Quality for ETF portfolios usually takes only four to six weeks. It also includes a best practices workshop. In addition to the award, product providers can gain additional insight into their product’s peer group as well as the specifics of best practice leaders as part of the evaluation.
Advisory & Coaching
Advisory we understand as professional support in the areas of ETFs, ETF portfolios and in other ETF product solutions for financial institutions. Our Advisory is therefore aimed at finance professionals only.
Our advisory is modular, in addition to specialist studies we also offer bank and asset manager testing and/or best practice workshops to discover new business opportunities as well as identify comparative competitive advantages.
We offer our strategic advisory services exclusively to ETF providers, financial service providers and banks. At its core, the advisory always focuses on the quality of ETFs or other index trackers or ETF portfolios as a passively managed asset strategy.
Our coaching approach supports especially company owners and self-employed persons with all basic questions about banking, passive index investing with ETFs, stock exchange and a “deferred compensation” with ETFs.
We understand our coaching as a long-term oriented investor support, especially for asset managing GmbHs or family offices.
Every coaching from XENIX includes, among other things, at least one strategic asset allocation with ETFs as well as an ongoing performance calculation with contribution analyses and portfolio reports.
ETF Awards
Yes, ETF providers, but also index providers and intermediaries such as banks or asset managers who offer investment solutions with ETFs to end customers can apply for a special prize at the ETF AWARDS in the different countries.
The awards given by XENIX at the ETF AWARDS are based exclusively on its own qualitative research and rating. In this way, XENIX ensures that all award winners offer qualitatively outstanding or particularly innovative products or services at the time of the award. At XENIX, there are no “compromise awards” based on jury decisions or incomprehensible “audience polls”.
There are basically three types of awards in the XENIX ETF AWARDS.
1. quality leaders, i.e. qualitatively outstanding ETFs that currently have the best ETF rating according to the Berlin ETF specialist XENIX in their respective comparison groups.
2. real ETF innovations
3. special awards recognizing special products or services for the respective ETF market.
The XENIX ETF AWARDS are usually awarded between fall and spring in the winter half-year at different times in the individual countries. The nominations are usually announced around three weeks before the awards ceremony. The winners will be published directly after the public award ceremonies.
The German ETF AWARDS have already been awarded since 2019. The Swiss ETF AWARDS have been published since 2021 and will thus be awarded for the fourth time by XENIX for the Swiss ETF market at the end of January 2024. The ETF AWARDS for other countries have been celebrated locally with the market participants there since 2022 and 2023 respectively.
XENIX mainly accompanies asset managing limited liability companies and their owners (so-called wealth offices). However, we also attach importance to private investors taking on investing with ETFs on their own responsibility. "Investing Successfully and Sustainably with ETFs!" is the second financial book by Dr. Markus Thomas after the "ETF Investor Book" of 2020. It will be published in the fall of 2023 (ISBN 978-3-9822290-7-2). The book can be ordered free of charge by e-mail here.
Invest successfully and sustainably with ETFs!
This guide is aimed at beginners, experienced ETF investors, but also wealth professionals who want to use ETFs to efficiently manage their retirement savings. The book is aimed at investors who invest rationally in markets and not just in individual bonds or shares in order to make self-determined provisions for the future. The basics of ETF investing are taught in a practice-oriented manner - expanded to include the important aspect of ESG ETFs. In addition, investors receive up-to-date information on all categories of bond ETFs in view of the interest rate turnaround and inflation wave.