ETFs - exploding the fuss about ETFs & when passive gets active: the best of both worlds

As the Exchange Traded Product (ETP) market in Europe has grown and matured in recent years, the expectations of investors has naturally grown with it, as has interest from European and Global supervisory authorities in how the market is developing. However, heightened media coverage has seen the emergence of misunderstanding and misconceptions surrounding ETFs, ETCs and ETNs and has prompted a surge in due diligence activity.

Yet despite ETFs accounting for less than 5% of European UCITS mutual fund assets, a disproportional amount of 'noise'regarding ETF due diligence has been focusing on the specific issues of structure, tracking efficiency, counterparty exposure, securities lending and collateralisation, - most of which are features common to all UCITS mutual funds. Is this scrutiny justified, and should financial planners and investors be concerned?

This IFP workshop will be presented by Arne Noack and David Stringer, key executives from the Deutsche Bank ETF range db X-trackers, and our Exchange Traded Commodities platform db-X ETC. It is therefore an ideal opportunity to clarify these issues and more:

• The advantages and disadvantages of the different ETP structures available to European investors
• The role ETFs play in the current stock market trading environment, securities lending and collateral standards.
• Does holding passives in a client portfolio somehow devalue that solution?
• The role of ETFs as low cost precision asset allocation tools, core or satellite holdings, or tactical instruments.
• The future trends in ETF usage and development, enhanced index products and “active” ETFs. The first "Active" ETF has recently been listed on the London Stock Exchange and could be a very interesting product for financial planners and clients to consider as it neatly combines the skills of a proven asset allocator/fund manager with the low cost and efficiency of an ETF of ETFs structure. Is this the best of both worlds?

Session Objectives

—Separate the facts and fiction and massively simplify all key aspects of ETFs/ETCs/ETNs/ETPs

—Provide summary update of all regulatory consultations and bring focus back to practical uses of ETFs

Session Outcomes

—Members will be better equipped to assess risk in all financial products and feel confident explaining the structure of all ETPs.

—Members can better assess the suitability of various ETP types for their clients and better assess the best dealing options, on or off platforms.

The db X-trackers ETFs AUM has grown to over £30bn and we have extended our range of ETFs to now offer over 240 ETFs in a broad spread of asset classes and sectors, covering Equity, Bonds, Credit , Cash, Currency, Commodity, Alternative and Multi-Asset ETFs. New fund development is continuous.

At the recent inaugural Investors Chronicle awards, of the fifteen categories in total, 5 were for ETP categories. Of those, we were nominated in all and won 3 of the 5 (Best UK equity ETF for our FTSE 100 ETF (XUKX) , Best ETF for emerging markets equity exposure, with the MSCI EM ETF (XMEM) , and Most Innovative ETP, for our sterling-hedged gold ETC). The awards were given on the basis of analysing tracking performance, fees, transparency and investor communications.