U.S. investors looking to invest in the European equity markets can look to two new low-cost Deutsche Asset Management (DeAM) ETFs debuting this Friday.
The Xtrackers Germany Equity ETF (Bats: GRMY) and Xtrackers Eurozone Equity ETF (Bats: EURZ) will launch with expense ratios of 0.15% – the ETFs will provide benchmark exposure to the stock markets of Germany and the Eurozone respectively.
Additionally, DeAM will reduce the expense ratio of its Xtrackers Japan JPX-Nikkei 400 Equity ETF (NYSE: JPN) to 0.15%, also effective Oct. 27. JPN provides investors with benchmark exposure to the Japanese stock market by tracking the JPX-Nikkei 400 index.
Arne Noack, Director of ETP Development Group at DeAM, told ETF Trends the low fees on these three ETFs will essentially be direct competitors to the likes of iShares MSCI Eurozone ETF (EZU), iShares MSCI Japan ETF (EWJ), iShares MSCI Germany ETF (EWG) and SPDR EURO STOXX 50 (FEZ) – ETFs that total about $40 billion of assets.
“The first three of those are priced at 48 basis points (EZU, EWJ and EWG) and FEZ at 29 basis points,” Noack said. “We come in with a very meaningful cost-saving potential.”
Noack said DeAM recognized there is a lot of demand for the $40 billion in assets linked to those markets.
“If we compare the pricing level U.S. investors have to face here with what Deutsche Asset Management is used to with our European business where we cover those three markets at substantially lower costs to investors, we see a meaningful potential for savings for U.S. investors,” Noack said.
GRMY seeks to track the Nasdaq Germany Large Mid Cap Index, which is designed to track the performance of the German equity market.
EURZ seeks to track the Nasdaq Eurozone Large Mid Cap Index, which is designed to track the performance of equity securities from issuers based in the countries in the Economic and Monetary Union of the European Union.
JPN seeks to track the JPX-Nikkei 400 Total Return Index, a benchmark consisting of 400 Japanese securities that pass a rigorous screening process. The index uses indicators such as return on equity, cumulative operating profit, and market capitalization to select high-quality, capitally-efficient Japanese companies.
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Fiona Bassett, DeAM Head of Passive Asset Management, Americas, said globally, DeAM has been offering ETFs linked to international benchmark indices for more than 10 years.
She added DeAM is currently managing $15.6 billion in ETF assets linked to benchmarks for the Eurozone, Germany and Japan.
“These capabilities and our European heritage mean that we are well-positioned to bring meaningful efficiencies and cost savings to US investors for these exposures,” Bassett said.
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