Deutsche Bank's U.S.-based ETF unit filed regulatory paperwork
that would give it permission to issue long/short and 130/30
long/short exchange-traded funds targeting either U.S. or non-U.S.
securities, as the firm continues to push into the U.S. ETF market
with its 12-fund lineup of "db X-trackers" funds.
The filing requests permission to market index-based funds with
either a straight 100 percent long/100 percent short approach or
with 130/30 strategies. Any such funds launched that target foreign
securities will do so using depositary receipts-as long as they are
liquid enough, the filing said.
The filing speaks to the flexibility of the ETF wrapper and to
the hotbed of innovation that the ETF industry has become. Advisors
and investors, more and more, are coming to expect previously
inaccessible strategies to become available-all in relatively
inexpensive packages that can be traded intraday on exchanges.
Deutsche is also seeking permission to create its own indexes on
the long/short funds, making the company part of one of the more
interesting trends in the world of
and indexing of the past few years. Firms like WisdomTree and
IndexIQ pioneered so-called affiliated indexes, but it has begun to
spread and now includes newcomers such as Northern Trust's ETF
Additionally, Deutsche is seeking to package some of the funds
in a "master feeder" structure, which means, among other things,
that each master fund would also operate as a traditional mutual
fund, the filing said. The master feeder structure recalls the way
Vanguard entered the ETF market; namely, by making its
exchange-traded funds separate share classes of its open end mutual
Deutsche Bank, as noted, now has 12 U.S.-listed ETFs, with total
assets of $421 million, according to IndexUniverse's latest ETF
League Table. Crucially, however, that $421 million figure
massively understates the company's U.S. assets under
After all, the firm sponsors the "PowerShares DB" families of
ETFs and ETNs, which make up a big chuck of PowerShares' assets. As
an example, the $6.4 billion PowerShares DB Commodity Tracking Fund
(NYSEArca:DBC) can fairly be counted as Deutsche assets, though
Invesco PowerShares does play a hugely important role in marketing
the "PowerShares DB" brand in the United States.
ALPS Distributors' name was also on the filing, suggesting that
the Denver-based company will be responsible for marketing the
funds. ALPS is also the sponsor of 11 of its own ETFs, with total
assets of more than $7 billion.
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