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ETFs are passive investment structures designed to track the performance of specific indices, delivering market performance at affordable rates as investors don’t have to pay a premium on the promise of excess returns to the market.
Db X-trackers comprise five ETFs, each linked to an offshore index.
From July 1, the maximum management fee (previously 1.00% plus VAT) came down to 0.60% plus VAT on the firm’s flagship fund, the db x-tracker MSCI World Index ETF and down to 0.75% plus VAT on its other ETFs.
Wehmeyer Ferreira from Deutsche Securities said fee reductions were made possible by economies of scale resulting from asset growth.
He added: “In the year to the end of May, our funds achieved over 60% asset growth. Total assets under management (AUM) top R3.195bn and we project strong continued net inflows.
“A key element in our market strategy is the affordability of ETF fees versus actively managed alternatives and, as we have reached critical mass allowing economies of scale, we have chosen to reduce our fees.”
New fee structures for JSE listed db X-trackers reduce the gap with international listed ETFs, a category of investment that has enjoyed substantial growth across major investment markets in recent years, delivering the volumes that enable lower fees.
Ferreira attributed local growth over the last year to four factors:
- Greater understanding of the advantages of exposure to passive investments like tracker funds as history shows most actively managed funds fail to beat the market average over the long haul
- Greater cost sensitivity by investors who now realise total returns are greatly reduced once fees are subtracted;
- Greater appreciation of the benefits of international diversification as a strategic imperative when portfolios are being constructed;
- Rand weakness – underlining the benefit of exposure to offshore markets with stronger foreign currencies;
Ferreira noted: “We’re witnessing growing interest from both institutional and retail investors. We see the trend as long term, which is why we project continued growth in AUM.
“Institutional investors in particular are focused on costs and net yield. We therefore foresee a further uptick in our inflows on the back of our new fee schedule.”
db X-trackers offer ETFs linked to the UK’s FTSE 100, the Euro Stoxx 50, the MSCI Japan Index, the MSCI USA Index and the MSCI World Index.
New fees:
db x-trackers FTSE 100 Index ETF (DBXUK); db x-trackers DJ Euro Stoxx 50 Index ETF (DBXEU);
db x-trackers MSCI USA Index ETF (DBXUS) & db x-trackers MSCI Japan Index ETF (DBXJP)
Value of participatory interests held over the period
Management fee (excl. of VAT) p.a.
Less than or equal to R10m
0.75% (75 basis points)
Value in excess of R10 million but less than or equal to R100m
0.60% (60 basis points)
Value in excess of R100m
0.40% (40 basis points)
db x-trackers MSCI World Index ETF (DBXWD)
Value of participatory interests held over the period
Management fee (excl. of VAT) p.a.
Less than or equal to R100m
0.60% (60 basis points)
Value in excess of R100m
0.40% (40 basis points)
Previous fees:
db x-trackers FTSE 100 Index ETF (DBXUK) & db x-trackers DJ Euro Stoxx 50 Index ETF (DBXEU)
Value of participatory interests held over the period
Management fee (excl. of VAT) p.a.
Less than or equal to R1m
1.00% (100 basis points)
Value in excess of R1 million but less than or equal to R10m
0.80% (80 basis points)
Value in excess of R10 million but less than or equal to R100m
0.60% (60 basis points)
Value in excess of R100 million but less than or equal to R1bn
0.40% (40 basis points)
Value in excess of R1bn
0.20% (20 basis points)
db x-trackers MSCI USA Index ETF (DBXUS); db x-trackers MSCI Japan Index ETF (DBXJP) &
db x-trackers MSCI World Index ETF (DBXWD)
Value of participatory interests held over the period
Management fee (excl. of VAT) p.a.
Less than or equal to R10m
1.00% (100 basis points)
Value in excess of R10m but less than or equal to R100m
0.80% (80 basis points)
Value in excess of R100m
0.60% (60 basis points)
- Fin24
