Exchange traded fund providers are leveraging their institutional investment background to grow. For instance, after bringing together its wealth and asset management units, Deustche Bank has increased its presence in the ETF space, expanding its line of passive investment strategies.
Deutsche Asset & Wealth Management manages a suite of exchange traded products through both its db X-trackers and PowerShares DB platforms. According to BlackRock data, Deutsche Bank is the fifth-largest ETP sponsor globally, with $54.3 billion in assets as of May. In the U.S., the sponsor has 55 products – 23 ETFs and 32 exchange traded notes, with about $11.6 billion in assets under management.
In September 2012, the bank merged its asset and wealth management businesses, transferring its ETF business to the new unit from its commercial and investment banking side, reports Jackie Noblett for Ignites.
Deutsche Bank has been able to utilize its Asset & Wealth Management expertise to engineer new ETF strategies.
“The US db X-Trackers ETFs follow the more traditional securities based strategies, for example stocks and bonds,” Martin Kremenstein, head of Americas passive management at Deutsche Asset and Wealth Management, said in an email. “We were able to leverage the strong expertise and brand of existing businesses within Deutsche Asset & Wealth Management.”
For instance, the fund provider recently launched the db X-trackers Municipal Infrastructure Revenue Bond Fund (NSYEArca: RVNU), the first to provide exposure to muni infrastructure revenue bonds, and the db X-trackers Regulated Utilities Fund (NYSEArca: UTLT), the first the cover a full portfolio of regulated utilities. [Infrastructure Muni ETF Debuts On Tuesday]
One of the best performing strategies year-to-date has been the db X-trackers MSCI Japan Hedged Equity Fund (NYSEArca: DBJP). which has attracted about $109.7 million in assets and gained 22.4% year-to-date. The provider offers a suite of currency hedged country-specific ETF plays, including the recently launched db X-trackers MSCI Germany Hedged Equity Fund (NYSEArca: DBGR). [Deutsche Bank to Launch Euro-Hedged ETF for Germany]
“The hedged equity strategies protect investors from the movements between currencies by mitigating the foreign exchange risk,” Kremenstein, added. “This can reduce volatility in the portfolio and allow investors to position themselves for changing trends in the market. With the potential for the dollar to rise in value against the JPY, EUR, GBP, CHF and EM currencies over the coming years, using a hedge product, either in whole or in part makes a lot of sense.”
Meanwhile, the sponsor has enjoyed the PowerShares distribution arm to market futures-based ETNs.
“These strategies focus on market exposures that can be accessed using futures contracts, notably in the commodities space,” Kremenstein said. “The products structured as ETNs were those strategies that fit best in that wrapper, notably the leveraged and inverse products. PowerShares will provide the best platform for some futures based exchange traded products currently in the pipeline.”
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Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.