db X-trackers Soars Ahead On Physical ETFs

db X-trackers has seen impressive growth of assets under management (AUM) in its physically replicated exchange traded fund (ETF) range since it converted a large swathe of funds from synthetic to direct replication.

Physical ETFs’ AUM have jumped from €1.5 billion to €24.6 billion since the start of 2014. The provider has made a total of 35 fund conversions to physical, with more than 50 such ETFs at present. This makes up around 46 percent of the provider’s total €53 billion AUM in ETFs.

The directly replicated range includes the newly-launched db X-trackers II Harvest CSI China Sovereign Bond UCITS ETF (ticker CGB), the first such fund to be in a physical structure, and one of only two ETFs launched this year that Morningstar claimed to be first of a kind in Europe.

db X-trackers launched 21 ETFs in the first half of 2015, out of a total of 94 ETF launches in Europe so far this year, according to Morningstar.

However, Simon Klein, managing director, head of ETPs, EMEA and Asia at db X-trackers, said investors can’t expect the provider to convert all funds to physical, like commodities, or its Gulf Corporation Council equities ETF.

“And where it obviously made sense to make a switch we've already done it,” he said.

Klein said the current focus for the firm is to launch more high yield ETFs.

“I think there’s always more room for innovation, particularly in fundamental fixed income,” said Klein.

However, db X-trackers is still far behind its competitor iShares. It won €4.6 billion inflows in the first half of 2015, compared to iShares’ €12.6 billion over the same period. db X-trackers’ total AUM is around a quarter of iShares’.