Physical ETFs track an underlying index, like the Dow, S&P 500 or Nasdaq, by selecting shares from within the underlying index through a full replication technique or a partial, sampling technique. [Making Sense of Physical and Synthetic ETFs]
DeAWM will not abandon synthetic ETFs entirely as it maintains that synthetic products are cheaper and more efficient for investors than rival physical ETFs. For instance, as the company makes the switch over to physical components, the Euro Stoxx 50 ETF will have a 0.09% expense ratio, compared to zero previously.
Deustche Asset and Wealth Management is the second largest European ETF provider with €35.9 billion, or $49.1 billion, in assets.
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Max Chen contributed to this article.