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September 22, 2013 4:19 am
Deutsche Asset & Wealth Management wants to capture retail investors’ growing interest in exchange traded funds by expanding its offering of commission-free ETF savings plans in Europe.
Agreements have been reached with all the main banks and online brokers in Germany to offer the plans, which provide access to DeAWM’s complete range of db X-trackers ETFs and exchange traded products.
DeAWM expanded the initiative into the Nordic countries at the end of March through an agreement with Nordnet, an online broker. It plans to offer the commission-free ETF savings plans in Austria and Italy within six months and is also considering a UK launch.
Kai Bald, head of public distribution for passive products, says ETF inflows from retail investors were an increasingly important business for DeAWM.
“Tickets [deal sizes] are obviously smaller than for institutional buyers, but retail flows tend to be more stable,” Mr Bald says, noting that DeAWM had now completed more than 300,000 ETF trades for retail investors.
Many retail investors in Germany had been put off buying individual stocks because of high equity market volatility in recent years, Mr Bald adds. An increasing number were building savings plans based on model portfolios and a range of ETFs.
“Some people feel that it is impossible to build a substantial savings pot with only modest contributions in the current low interest rate environment but this is really not the case,” he says.
He notes that investing €16,000 in January 2000 as a lump sum into a Dax ETF would have produced €18,366 by April 2013. However, a regular savings plan of €100 each month over the same period (160 months) in the same Dax ETF would have generated €27,588. A similar £100 monthly saving into a FTSE ETF over 160 months would have produced £30,347, compared with £24,277 for a lump-sum investment of £16,000 made in January 2000.
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