Deutsche closes down 36 ETFs and ETCs to “tidy up” its product range

Deutsche Asset & Wealth Management has announced the closure of 18 exchange-traded funds (ETFs) and 18 exchange-traded commodities (ETCs), affecting some €110m of product AUM.

The aim is to “tidy up” the product range it offers clients, while using its resources to keep expanding the db x-trackers ETF platform, according to Manooj Mistry (pictured), London-based head of exchange-traded products in Europe, the Middle East and Africa at Deutsche Asset & Wealth Management.

Mistry says the move does not mean a refocusing of the business, but that the closure of these ETFs and ETCs is a consequence of the lack of demand and the small quantity of assets managed within the products. “We haven’t raised the assets we would have liked to because these products haven’t had too much take-up by clients, and we have decided to focus our resources on launching new products,” says Mistry.

Within the 18 ETFs that are being shut down, two – the db x-trackers FTSE 100 Leveraged Daily Ucits ETF and the db x-trackers FTSE 100 Super Short Daily Ucits ETF – are listed on the FTSE 100, which has raised calls from market participants about Deutsche’s ability to compete in the UK market. “With this move, they suggest they are not succeeding in the UK market. They are also taking away some GBP hedge products, so I wonder if they are struggling [in the UK], because it’s weird to take FTSE 100 products away given that it is a very liquid market,” says Hector McNeil, co-chief executive officer at Boost ETP, a London-based ETF provider.

Mistry says those two specific products are leveraged products, and therefore, more specialised, and the demand in the past three years has not been great, but he says they are keeping the regular FTSE UK index products.

Deborah Fuhr, managing partner at research firm ETFGI, agrees with Mistry and says Deutsche’s move “is probably looking for aligning the products to asset management. When you are an investment bank, you might launch some products that are more trading oriented, because you are working with traders and can make money off the trading volumes. However, when you are sitting within asset management, you want products that asset managers and high-net-worth investors will use as portfolio building blocks.”

Boost’s McNeil says investors tend to dislike this type of move, something Mistry is willing to concede: “I can understand that if you are an investor in one of these products, you might not be so happy,” says Mistry. “However, it is in the interest of investors, because if you have a small fund then you don’t have efficiencies in terms of cost, so the investors are in a product that maybe is not the most efficient.”

Deutsche’s ETFs still sit under the umbrella of the synthetic label – it has 220 synthetic products versus just 10 physical. Nevertheless, since the end of 2012, Db x-trackers has offered investors a choice of physical- or replication-based products on some benchmarks. As for the expansion Mistry refers to, db x-trackers wants to increase ETFs in fixed income, linking products to sovereign bonds, inflation-linked bonds, as well as “filling gaps” in its equity-based ETFs.


This article was first published on Risk

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