db X-trackers, Deutsche Bank’s exchange-traded funds (ETF) platform, has listed its first direct replication ETFs tracking major equity benchmarks. The listings follow last month’s announcement that is was to launch a range of physically replicated ETFs alongside its existing swap-based line-up. [See db X-trackers to offer physically-replicated ETFs].
db X-trackers has launched its first direct replication equity ETFs.
The new funds, which have been launched on the London Stock Exchange, track the FTSE 100 Index, the EURO STOXX 50 Index and the EURO STOXX 50 ex Financials.
Direct replication (also known as ‘physically replicated’) ETFs invest directly in all or an optimised sample of the securities that constitute the index.
By contrast, indirect replication – also known as ‘swap-based’ or ‘synthetic replication’ – involves the ETF entering an agreement with a swap counterparty to provide the returns of the index being tracked.
Prior to this launch, db X-trackers focused almost exclusively on the indirect method of replication and has existing indirect replication ETFs tracking the FTSE 100 and the EURO STOXX 50 indices. These funds are to remain unchanged, offering investors a choice of replication technique in these markets.
Manooj Mistry, Deutsche Bank’s head of exchange-traded products, EMEA, said: “We recently announced our intention to offer investors replication choice in certain key equity markets. The listing of these products commences that initiative, with more direct replication products to follow.”
He added: “Passive investments are set to gather a growing share of investor assets in coming years. We are determined to meet the needs of all investors in this area. That means not only offering Europe’s widest choice of underlying exposures in ETF format, but also the choice of replication method used, for certain markets.”
The newly launched funds are as follows:
| Product name | Ticker | TER | CCY |
| db x-trackers FTSE 100 UCITS ETF (DR) | XDUK | 0.30% | GBP |
| db x-trackers EURO STOXX 50 UCITS ETF (DR) | XD5E | 0.15% | EUR |
| db x-trackers EURO STOXX 50 Ex-Financials UCITS ETF (DR) | XD5F | 0.20% | EUR |
While the FTSE 100 and EURO STOXX 50-based ETFs have existing swap-based counterparts, the db X-trackers Euro STOXX 50 Ex-Financials UCITS ETF (DR) (XD5F) offers access to a new market segment.
The EURO STOXX 50 ex Financials Index follows the same methodology as the underlying EURO STOXX 50 Index, but excludes all companies in the underlying index which are classified as Financials.
“The EURO STOXX ex Financials Index offers market participants a tool to access the performance of leading eurozone companies without exposure to the financial industry,” said Hartmut Graf, chief executive officer of Stoxx, the company behind the index.