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Fixed-income ETFs grow 250 per cent in less than two years, says Deutsche


There has been an explosion in fixed income exchange-traded fund assets under management in Europe, with 250 per cent growth in less than two years, according to Deutsche Bank.

There has been an explosion in fixed income exchange-traded fund assets under management in Europe, with 250 per cent growth in less than two years, according to Deutsche Bank.

Of this, 44 per cent can be attributed directly to db x-trackers, Deutsche Bank’s ETF platform, which raised EUR10bn in fixed income ETF assets between June 2007 and February 2009.

While fixed-income ETF assets have climbed from EUR9bn to EUR31.7bn over the 20-month period, db x-trackers have seen an average asset accumulation in fixed income ETFs of EUR500m per month.

Money market ETFs have also enjoyed phenomenal growth since their introduction in Europe by db x-trackers in June 2007 with the Deutsche Bank Eonia (European overnight index average) ETF. The Eonia ETF has accumulated more than EUR6bn assets under management, which represents more than 20 per cent of the European fixed income ETF market.

‘db x-trackers have been instrumental in the innovation and growth of the fixed income ETF market in Europe,’ says Marco Montanari, head of fixed income ETF structuring at db x-trackers.

‘Since June 2007 more than three quarters of our fixed income ETFs assets under management can be directly attributed to our ‘first to market’ products including Eonia, our range of short bond and credit default swap products and our inflation products. The market has responded positively to innovations from db x-trackers and we aim to continue to launch new and relevant products in this space.

‘The success of the money market ETF range has been driven in particular by institutional clients seeking the advantages that these products offer them, namely transparency, flexibility, low costs and a tactical tool box that they can easily access.’

Thorsten Michalik, head of db x-trackers, adds: ‘At present the majority of the db x-tracker fixed income ETF range is listed on Frankfurt Xetra, and Borsa Italiana, however we have plans to launch a dedicated range of fixed income ETFs for the UK market later this year.’

Despite the growth of assets under management, fixed income ETFs still account for just 30 per cent of the total ETF market in Europe compared to a 48 per cent share of the mutual fund market, suggesting that there is both room and appetite for further growth in this sector.

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