FRANKFURT Feb 10 Deutsche Bank will
cut commissions on four of its biggest European exchange-traded
funds, or ETFs, in a move to take market share from rivals such
as Vanguard and BlackRock and win over big institutional
Deutsche Asset & Wealth Management (DAWM) aims to increase
its German ETF market share to 20 percent from 12.5 percent by
the end of 2015 and has rebuilt some of its most successful ETFs
to hold shares rather than tracking indexes synthetically.
"We want to win over especially large institutional clients
like pension funds, insurance companies and sovereign investors
who have put little or no money in ETFs up to now," Simon Klein,
managing director of asset management at DAWM, said.
Analyst Detlef Glow at fund research firm Lipper, a unit of
Thomson Reuters, said: "It's a declaration of war ... With these
four indices, Deutsche Bank is making the cheapest offer on the
Total cost for the four ETFs - which track the DAX, FTSE
100, Eurostoxx 50 and MSCI USA - will be 9 basis points, or 0.09
percent of assets, DAWM said in a statement. The company plans
to expand the list of funds throughout the year.
That will match the lowest-priced European ETFs, offered by
Vanguard and HSBC, both of which charge 9 basis points for their
S&P 500-tracking ETFs.
And Deutsche will beat the price on Vanguard's FTSE 100 ETF,
which at 10 basis points has until now been the cheapest in the
market for that index.
The average cost to manage the 230-odd EFTs now on offer by
Deutsche Bank is 32 basis points.
Investors and financial advisers have favoured low-priced,
passively managed index funds over actively managed funds not
only due to cost, but also because many active funds have
underperformed the index-tracking ETFs.
"Up to now, ETFs were too expensive for pension funds to
invest in. Many could build their own indices more cheaply. With
Deutsche Bank's offer, ETFs will certainly become more
attractive," Glow said.
Deutsche's biggest competitors in the ETF segment are
BlackRock, the world's largest money manager, U.S.-based
Vanguard and Lyxor, which belongs to French bank Societe
Deutsche Bank managed 931 billion euros at the end of 2013,
placing it behind competitors including Bank of America,
UBS und Credit Suisse.