Asia trumps Europe for new Deutsche ETFs

Deutsche Bank has launched a new, Ucits-compliant China exchange-traded fund (ETF) as part of its db x-trackers series on Singapore Exchange (SGX). The China A-Shares ETF tracks the performance of the CSI 300 Index and adheres to the Ucits-3 code for European-domiciled mutual funds.

Deutsche also plans to launch another Ucits 3-compliant ETF tracking the MSCI Indonesia Index on SGX next week. Both products will be first offered to investors in Asia before being marketed in Europe.

"Asia is now becoming a new financial centre and this is the first time we have listed ETFs in Asia before Europe", says Marco Montanari, Hong Kong-based head of Deutsche Bank's db x-trackers business in Asia.

(For more on Asian versus European fund flows, click here.)

"Investors seek exposure to these two rapidly growing markets, and meanwhile they look for products with well-recognised compliance," he adds.

There already exists other ETFs tracking the China A-share market, but Montanari says the Deutsche product is cheaper and more transparent. It has an expense ratio of 0.5%, versus the .74% for the popular Xinhua China 25 Index Fund.

Indonesia's economy recorded a 5.4% growth in the fourth quarter of 2009, beating many analysts' estimates, and is becoming more popular with investors.

"There are not many existing products providing exposure to the Indonesian market," says Montanari. He expects the Indonesia ETF's AUM to exceed that of an equivalent for Vietnam, which currently has assets of $200 million.

The launch of the two new ETFs will give Deutsche Bank the most ETFs in Singapore, with 22 listed products; it also has 30 listed in Hong Kong, which is the most of any single manager.

More products are in the pipeline, including ETFs covering specific sectors such as commodities, high-dividend stocks and other emerging markets, Montanari says.