Deutsche to switch Asia ETFs to physical replication

09 June 2014   Category: News, Asia, Global, Singapore   By Derek Au

Deutsche Asset & Wealth Management (DeAWM) is to convert a number of its Asia-listed ETFs from synthetic to physical replication, continuing a trend seen with its exchange-traded products in Europe.

DeAWM, which has 923 billion euros (US$749.46 billion) in AUM, said that it would make the switch with 12 of its db x-trackers ETFs that are listed on the Singapore Stock Exchange, including ETF products with exposure to mainland China A-share and Hong Kong H-share indices. The move will make the fund manager the largest provider of physical ETFs in Singapore, with 48 listings.

The move comes after DeAWM similarly switched 18 of its db x-trackers ETFs listed in Europe to physical replication. DeAWM said that the administrative and legal costs associated with implementing the change in replication methodology would not be passed onto the ETFs themselves, and would not impede performance.


Arne Noack, DeAWM’s head of ETF product development, EMEA, said: “Following this switch, our ETFs will maintain the same high standards of transparency, tracking and operational efficiency investors have come to expect from db x-trackers products.”

DeAWM did not provide a reason for making the changes, but global financial regulators, including the European Securities and Markets Authority, have previously expressed concerns that synthetic ETFs are too complex for retail investors. As opposed to physical ETFs, which replicate the weightings of equities in an underlying index, synthetic products rely on riskier derivatives such as swaps.

The full list of ETFs that will be converted is as follows:

ETFs

Share Class

db x-trackers MSCI EUROPE INDEX UCITS ETF (DR) – switched on 5 March 2014

Class 1C (ISIN Code: LU0274209237)

db x-trackers EURO STOXX 50® UCITS ETF (DR) – switched on 18 March 2014

Class 1C (ISIN Code: LU0380865021)

db x-trackers MSCI JAPAN INDEX UCITS ETF

Class 1C (ISIN Code: LU0274209740)

db x-trackers MSCI PACIFIC EX JAPAN INDEX UCITS ETF

Class 2C (ISIN Code: LU0455009935)

db x-trackers MSCI BRAZIL INDEX UCITS ETF

Class 2C (ISIN Code: LU0455009182)

db x-trackers FTSE CHINA 25 UCITS ETF

Class 1C (ISIN Code: LU0292109856)

db x-trackers MSCI KOREA INDEX UCITS ETF

Class 1C (ISIN Code: LU0292100046)

db x-trackers MSCI CHINA INDEX UCITS ETF

Class 1C (ISIN Code: LU0514695690)

db x-trackers S&P/ASX 200 UCITS ETF

Class 1C (ISIN Code: LU0328474803)

db x-trackers MSCI TAIWAN INDEX UCITS ETF

Class 1C (ISIN Code: LU0292109187)

db x-trackers MSCI PHILIPPINES IM INDEX UCITS ETF

Class 1C (ISIN Code: LU0592215403)

db x-trackers MSCI THAILAND INDEX UCITS ETF

Class 1C (ISIN Code: LU0514694701)

db x-trackers MSCI MALAYSIA INDEX UCITS ETF

Class 1C (ISIN Code: LU0514694370)

db x-trackers MSCI SINGAPORE IM INDEX UCITS ETF

Class 1C (ISIN Code : LU0659578842)