DeAWM accelerates push into fixed income ETFs

Sep 17th, 2013 | By | Category: Fixed Income

Deutsche Asset & Wealth Management (DeAWM), the investment management division of Deutsche Bank, has rolled out eight new fixed income ETFs this month in an assertive effort to position itself as a leading European provider in the fixed income space.

DeAWM accelerates push into fixed income ETFs

DeAWM has launched eight new fixed income ETFs in a bid to position itself as a leading provider in the fixed income space.

Simon Klein, DeAWM’s Head of Exchange Traded Product Sales, EMEA and Asia, said: “The development of the fixed income space is still nascent, but we’re well placed to be a leading provider of fixed income ETFs as this area of the market develops.”

The eight new funds have initially been listed on the Deutsche Börse, but, based on previous launches by DeAWM, cross-listings on other European exchanges are likely to follow.

The funds include two first-to-market ETFs, providing exposure to short-dated higher-yield Eurozone sovereign debt and the Canadian dollar overnight interest rate, as well as products linked to the performance of Spanish sovereign debt, Italian sovereign debt, global sovereign debt and inflation-linked debt.

The first-to-market db X-trackers II iBoxx Sovereigns Eurozone Yield Plus 1-3 UCITS ETF (XYP1), which is likely to prove popular with investors looking for a reasonable yield while guarding against potential higher interest rates, provides exposure to shorter-dated sovereign debt of the Eurozone’s five highest-yielding investment grade countries. Countries currently included are Italy, Spain, Belgium, Ireland and Slovakia, with the weighting for each country based on the total market value of the relevant debt for that country.

The launch of this fund comes on the back of significant inflows into the db X-trackers II iBoxx Sovereigns Eurozone Yield Plus UCITS ETF (XY4P), which provides aggregate exposure to the same five countries. This fund launched back in September 2010 and has gathered almost £700 million in assets under management.

Arne Noack, DeAWM’s Head of Product Development for Exchange Traded Products, EMEA, commented: “Providing investors with exposure to areas of the fixed income market that may be more difficult to access via easy-to-trade products is a key development aim for us. Our shorter-dated Eurozone Sovereign Yield Plus ETF has already gathered over €160 million in assets under management prior to its first listing, demonstrating that we’re meeting investors’ needs in terms of new opportunities”.

The bulk listing includes two new Spanish government bond ETFs, the db X-trackers II iBoxx Spain UCITS ETF (XIES) and the db X-trackers II iBoxx Spain 1-3 UCITS ETF (X1ES). These funds enable investors to participate in the performance of aggregate and short-term debt, respectively, issued by the Spanish government.

There are also two new Italian government bond ETF, the db X-trackers II MTS Italy Aggregate 1-3 Years – Ex-Bank of Italy UCITS ETF (XI13) and the db X-trackers II MTS Italy Aggregate 3-5 Years – Ex-Bank of Italy UCITS ETF (XIT3). These funds allow investors to participate in the performance of short-term and immediate-term debt, respectively, issued by the Italian government.

The provider’s new db X-trackers II Canadian Dollar Cash UCITS ETF (XCXC) gives investors access to the Canadian Overnight Repo Rate (CORRA). This is the first time the COBRA benchmark has been accessible in ETF format. The fund is denominated in euros, meaning it provides a straightforward way for euro-denominated investors to take a position in the Canadian currency – with an appreciation of the Canadian dollar leading to a gain.

Finally, DeAWM has listed two new global sovereign bond ETFs: the db X-trackers II Global Sovereign UCITS ETF and db X-trackers II iBoxx Global Inflation-linked UCITS ETF. The conventional global sovereign ETF enables investors to participate in the performance of investment grade local currency bonds issued by the governments of industrialised countries, while the global inflation-linked ETF provides investors with access to the most important inflation-linked government and quasi-government bonds in the local currency of the issuing country.

UK-based investors looking to invest in these funds should not be put off by their Deutsche Börse listings, as they have all been registered in the UK, have UK Distributor Status and are eligible for SIPPs.

The full list of new funds and their tickers is as follows:

db X-trackers II iBoxx Sovereigns Eurozone Yield Plus 1-3 UCITS ETF (XYP1)
db X-trackers II MTS Italy Aggregate 3-5 Years – Ex-Bank of Italy UCITS ETF (XIT3)
db X-trackers II MTS Italy Aggregate 1-3 Years – Ex-Bank of Italy UCITS ETF (XI13)
db X-trackers II iBoxx Spain UCITS ETF (XIES)
db X-trackers II iBoxx Spain 1-3 UCITS ETF (X1ES)
db X-trackers II Canadian Dollar Cash UCITS ETF (XCXC)
db X-trackers II iBoxx Global Inflation-Linked UCITS ETF (XGIU)
db X-trackers II Global Sovereign UCITS ETF (XG7S)

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