Deutsche Asset Management’s (Deutsche AM) db X-trackers platform has launched the world’s first exchange-traded fund (ETF) providing exposure to the Asia ex-Japan US dollar corporate bond market 1. Deutsche AM’s db X-trackers platform launches the first Asia ex-Japan USD corporate bond ETF
) has listed on the Deutsche Börse today and is due to list on the London Stock Exchange next week. The ETF tracks an index currently composed of 148 investment-grade corporate bonds from nine countries2. It is a direct, physical replication ETF.
“Asia US dollar Investment Grade (IG) corporate bond issuance increased from around USD 21 billion dollars in 2010 to around USD 63 billion dollars in 20153. This is an important and growing section of the global bond market, and this new ETF provides investors with a flexible and efficient way to access such exposure,” says Anson Chow, Deutsche AM’s Head of Exchange Traded Product Development, Asia-Pacific.
The ETF’s underlying index is the Markit iBoxx USD Liquid Asia Ex-Japan Corporates Large Cap Investment Grade Index®. Only bonds with over USD 750 million in outstanding notional qualify for inclusion in the index, which has a yield of 3.10%, average duration of 5.03 years, and average credit quality of ‘A-’4.
“It’s interesting to observe that over the past three years the Asia investment grade corporate bond market has generally shown a higher volatility-adjusted return compared to the US IG corporate universe5. And that in the past 10 years there have been no defaults in the bonds included in the index underlying this ETF7,” adds Chow.
As of 31 August, 2016, Chinese corporate bonds represent the highest weighting in the index, at slightly more than 50%. Corporate bonds from Hong Kong and India both have weightings of more than 10%. This is consistent with Greater China and India representing over 70% of the GDP of the Asia ex-Japan region6. Other countries represented in the index are Malaysia, Indonesia, Singapore, Thailand and South Korea.
The ETF has an annual All-in Fee of 0.30%.
Deutsche AM’s db x-trackers platform has an extensive range of fixed income ETFs, including the db x-trackers Barclays USD Corporate Bond UCITS ETF (DR), which is a physical replication ETF tracking the predominantly US corporate bond market. The ETF launched in October 2015 and has already attracted more than USD 550 million in assets under management8.
For further information please contact:
Narva, Olof Ehrs
+46 70 481 72 34 Olof.Ehrs@narva.se
Product Details
Name of ETF: db x-trackers II iBoxx USD Liquid Asia Ex-Japan Corporate Bond UCITS ETF (DR)
BBG Code: ALQD
ISIN: LU1409136006
Fund Currency: USD
Listing Currency: USD (LSE)/EUR (Xetra)
Annual All-in Fee: 0.30%
Physical/synthetic: Physical
UCITS compliant: Yes
1 Source: DB Research – Europe ETF + Quarterly Directory, US ETF + Quarterly Directory, Asia Pac ETF + Quarterly Directory, June 2016. www.dbresearch.com
2 Source, Markit, 31 August, 2016. www.markit.com
3 Source: BAML Research Asia Credit 360˚, 11 May 2016. http://www.bofaml.com/en-us/content/apac-asia-pacific.html
4Source: Bloomberg, Deutsche Asset Management, data as of 31 July 2016. Past performance is not indicative of future returns.
5 Source: BAML Research Asia Credit 360°11 May 2016. Past performance is not indicative of future returns. http://www.bofaml.com/en-us/content/apac-asia-pacific.html
6 Source: International Monetary Fund World Economic Outlook (April 2016). http://www.imf.org/external/pubs/ft/weo/2016/01/
7 Source: Markit, Deutsche Bank, data as of 29 July 2016. Past performance is not indicative of future returns.
8 Source: Deutsche AM, 23 August 2016. www.etf.db.com
Deutsche Asset Management
With EUR 719 billion of assets under management (as of June 30, 2016), Deutsche Asset Management¹ is one of the world’s leading investment management organizations. Deutsche Asset Management offers individuals and institutions traditional and alternative investments across all major asset classes.
¹ Deutsche Asset Management is the brand name of the Asset Management division of the Deutsche Bank Group. The respective legal entities offering products or services under the Deutsche Asset Management brand are specified in the respective contracts, sales materials and other product information documents.
Key risks
Investors should note that the db X-trackers UCITS ETFs1 are not capital protected or guaranteed and investors should be prepared and able to sustain losses of the capital invested up to a total loss.
Shares in db X-trackers UCITS ETFs which are purchased on the secondary market cannot usually be sold directly back to the relevant fund. Investors must purchase and redeem such shares on the secondary market with the assistance of an intermediary (e.g. a market maker or a stock broker) and may incur fees for doing so (as further described in the applicable prospectus). In addition, investors may pay more than the current net asset value of a share in a db X-trackers UCITS ETF when buying shares on the secondary market, and may receive less than the current net asset value when selling such shares on the secondary market.
Investments in funds involve numerous risks including, among others, general market risks, credit risks, foreign exchange risks, interest rate risks and liquidity risks. The value of an investment in a db X-trackers UCITS ETF may go down as well as up and investors may not get back the full amount of their original investment.
