Deutsche Bank’s exchange-traded funds (ETF) platform, db X-trackers, has launched a range of sector ETFs based on certain emerging market MSCI indices.
The ETFs track the performance of equity market sectors across 23 emerging market economies, including energy, information technology and healthcare (see below for full list of products). Investors who view specific emerging market sectors as having the potential to outperform can use the products to acquire cost-effective, liquid, long exposure, while active investors can use the ETFs to implement sector rotation strategies.
db X-trackers’ synthetic replication methodology allows for the efficient tracking of emerging markets exposures while minimising tracking difference (the difference between the performance of the index being tracked and the performance of the ETF). db X-trackers’ emerging markets ETFs are 100% collateralised (with applicable haircuts for equities ranging from 107.5% to120%) to reduce counterparty risk exposure. The swap counterparty in respect of all db X-trackers ETFs is Deutsche Bank AG.
“Our synthetic replication platform provides investors with some of the most precise, low cost tracking available. This is particularly important for investors in the emerging markets, which are traditionally difficult to access and where the underlying indices being tracked can be volatile,” says Manooj Mistry, head of db X-trackers for the UK.
db X-trackers developed synthetic replication to refine and improve the types of ETFs available to investors.
Mistry says: “Deutsche Bank ensures that db X-trackers ETFs deliver straightforward returns to investors, which means the exact returns of the underlying index minus the all-in fee and any applicable index replication costs. We have carefully put together our products to give investors the choice of accessing the emerging markets not just with effective tracking but also industry-leading standards of 100% transparency on the collateral, swaps and counterparty.”
The new emerging markets sector ETFs have been listed on the London Stock Exchange. In addition, db X-trackers has also recently launched ETFs that track the performance of African equity markets, Eastern European equity markets, and Chile’s equity market.
