Deutsche Bank and SCM Private, the asset management group, have teamed up to launch an actively managed multi-asset exchange traded fund that will use other ETFs to deliver above inflation returns.
The db x-trackers SCM Multi Asset ETF will act as a wrapper around a portfolio of ETFs and exchange traded commodities.
The constituent ETFs and their weightings will be reviewed on a monthly basis by Alan Miller, chief investment officer of SCM Private, who will be responsible for making the asset allocation decisions.
Mr Miller said numerous studies had shown that investment returns were for the most part determined by the broad market exposures chosen, rather than by picking individual stocks or bonds.
“Asset allocation is the key driver of outperformance and that is perfectly encapsulated in the db x-trackers SCM Multi Asset ETF,” said Mr Miller.
SCM Private has been running portfolio strategies that invest entirely in ETFs since it was founded in 2009.
The new ETF will follow a broadly similar overall asset allocation to SCM’s existing Absolute Return Portfolio which has returned 27.1 per cent (net of all charges) since it was launched in June 2009. The average return delivered by a fund in the IMA’s Absolute Return sector over the same period was 10.8 per cent while the average hedge fund has returned 5.7 per cent (as measured by the HFR hedge fund index in sterling terms).
Mr Miller said there were very few ETFs focused on asset allocation with just 10 such products available in Europe, in contrast to the rest of the mutual fund industry where there were 8,206 asset allocation funds for sale across Europe.
Manooj Mistry, head of db x-trackers for the UK, said active asset allocation via passive instruments was set to be a growing trend.
“At a more fundamental level, this product will appeal to investors looking for a straightforward and cost effective way to add an active element to their portfolio,” said Mr Mistry.
The new ETF has an “all-in” fee of 89 basis points a year. This includes management fees for the underlying ETFs and ETCs so there are no additional underlying fund-of-funds charges or other administration costs to investors. The ETF will charge dealing costs, estimated at 10bps a year, but investors will not have to pay stamp duty (50 basis points) which is payable on UK equity transactions.
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