Deutsche Asset Management is completing its transformation into one of Europe’s largest providers of physical replication exchange-traded funds,.…
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Simon Klein, Deutsche AM’s Head of Passive Investment Sales for EMEA and Asia
having recently announced the conversion from synthetic to physical replication of its ETFs providing exposure to euro-denominated corporate bond indices, and after switching the replication methodology of a number of its ETFs providing exposure to US Treasuries and Eurozone government bonds.
Assets in db X-trackers fixed income ETFs that have either switched or are now due to switch from synthetic to physical replication amount to approximately EUR 3.6 billion1.
The latest switches, which took place in September on government bond ETFs, takes to approximately 65% the number of db X-trackers ETFs now in direct replication form – representing around EUR 26 billion in assets2.
Simon Klein, Deutsche AM’s Head of Passive Investment Sales for EMEA and Asia, commented, “The market has shown clearly that bond investors prefer physical replication, so we’ve adapted to meet that demand. This is good for the market as there is now another major ETF house in Europe providing a wide range of physical ETF products. That makes it easier for investors to diversify their portfolios to include other ETF providers.”
Further db X-trackers fixed income ETF switches from synthetic to physical replication are due to take place. Once the switching process is complete, the majority of db X-trackers ETFs tracking both equity and bond markets will be physical replication funds.
According to consultants ETFGI, there is approximately USD 395.6 billion committed to physical ETFs in Europe, and USD 115.1 billion in synthetic ETFs3.
1 Source: Deutsche Asset Management, September 30, 2016.
2 European Monthly ETF Market Review Deutsche Bank Markets Research, Sept 9, 2016, page 40.
3 ETFGI data as of July 2016.