DWS CEO Stefan Hoops expects the firm to turn away from private banks and institutional clients as it targets second place in the European ETF market, he said recently.
Speaking to analysts following the German asset manager’s 2022 results, published February 2, Hoops said DWS is “building a pipeline of targeted and bespoke ETFs” to capitalise on strong flows into the category seen in the opening weeks of 2023.
DWS has long held an ambition to become Europe’s second-largest ETF issuer.
In January 2022, Amundi’s acquisition of Lyxor saw it displace DWS for the second spot – a position Hoops’ strategy is designed to reclaim.
By 2025, DWS hopes to lead Amundi by ETP (exchange-traded products) assets under management.
But clients withdrew €19.9 billion from the predominantly Deutsche Bank-owned asset manager last year. Hoops said clients sought to de-risk portfolios “given the adverse environment and prevailing expectations of a recession, yet the firm is still targeting annual asset growth of 12% over the coming three years.
Rising markets will account for a third of the growth, Hoops said, but the remainder will have to come from increased flows into the business. To do this, Hoops said DWS’ distribution channels need to be re-evaluated as they are currently “too reliant on private banks and large institutional clients,” while its fixed income offering warrants a refresh.
“We have some gaps in our fixed income offering, as you have seen with our very large competitors, they have strong inflows in fixed income on the passive side,” Hoops said.
The almost €20 billion in outflows brings a three-year period of net inflows to an end. In its 2022 results, DWS noted the net outflows were primarily in lower-margin product areas of fixed income, cash and passive. This was partially offset by positive flows in high-margin alternative investments and multi-asset and ESG strategies.
Hoops also said DWS is treated as a “guinea pig in the public eye for how other managers should set up their ESG”, following the asset manager’s cooperation with authorities investigating greenwashing allegations.
Hoops said: “We are having active discussions with authorities and are hopeful we are moving to a resolution. The board and I are focused on resolving the matter as quickly as possible.
“There are no precedents in Germany, we cannot exclude that the outcome may be adverse and could involve financial penalties,” he added.
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