Deutsche Rolls Out ‘FI Enhanced’ ETN

October 08, 2013

Deutsche rolls out a ‘me-three’ custom-made ETN with Fisher Investments’ name on it.

Deutsche Bank, the German firm behind a family of U.S.-listed ETFs and ETNs, today is rolling out a “me-three” double-exposure exchange-traded note targeting European blue chip companies, the third ETN of its kind launched by a European bank in the past three months.

The FI Enhanced Global High Yield Exchange Traded Notes will have its primary listing on Arca, the New York Stock Exchange’s electronic trading platform, and will trade under the symbol “FIEG.”

FIEG is, as noted, is the third identical ETN of its kind launched since summer. The first was the Barclays ETN+ FI Enhanced Europe 50 ETN (FEEU) and it was followed by the Credit Suisse FI Enhanced Europe 50 ETN (FIEU). All three are plays on Europe’s recovery. They were all issued by the respective banks on behalf of a particular client and in connection with Fisher Investments, a West Coast firm headed by Ken Fisher.

The three securities appear to be bespoken for a high net worth investor who is interested in gaining targeted exposure to Europe through an ETN, all while spreading credit risk between three of Europe’s biggest banks.

The new Deutsche ETN, FIEG and its two predecessors—FIEU and FEEU—are essentially bets that Europe is recovering from its debt crisis, which ravaged the eurozone in 2010 through at least half of 2012. The index around which the three ETNs are organized is composed of 50 European blue chip companies selected from within the Stoxx Europe 600 Index.

The parent index contains the 600 largest stocks traded on the major exchanges of 18 European countries: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

Prices Of The Three ETNs

As befits some ETNs, finding out the price of ETNs is anything but easy.

As an example, the price supplement detailing the Deutsche security FIEG said the ETN’s “investor fee” is the “Current principal amount × (initial leverage factor × index performance – 1 – investor fee on such trading day.” What that means in terms of basis points isn’t clear, and officials at Deutsche didn’t elaborate.

The prices of the other two “FI” securities are just a bit clearer.

Barclays’ FEEU has what the British bank calls an annual “exposure fee rate” that is the sum of 0.76 percent plus the three-month Libor rate, according to the latest paperwork that Barclays filed on its ETN.


In a pricing supplement, Credit Suisse said the “investor fee” for its new ETN “FIEU” would be “equal to the product of the ETN’s closing indicative value the previous business day; times 0.05 percent; times the ‘day count fraction.”

The three ETNs appear to be double-exposure versions of the index that underlies the nearly $100 million SPDR Stoxx Europe 50 ETF (FEU | C-86).

FEU, whose assets have risen sharply since late spring, comes with an annual expense ratio of 0.29 percent, or $29 for each $10,000 invested.


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