Deutsche Asset Management (Deutsche AM) is converting its exchange-traded fund (ETF) range that tracks US treasuries and Eurozone government bonds from synthetic to physical replication.
In 2013, the firm switched 18 of its biggest synthetic ETFs to physical replication, making it the second-largest provider of physical ETFs in Europe based on assets, behind BlackRock’s iShares division.
According to the firm, assets in its fixed income ETF range that have either switched or are now due to switch from synthetic to physical replication amount to approximately €3.6 billion.
The latest switches means that approximately 65% of the firm’s ETFs are physical replicatorss – representing around €26 billion in assets.
“The market has shown clearly that bond investors prefer physical replication, so we’ve adapted to meet that demand,” said Simon Klein Deutsche AM’s head of passive investment sales for Europe, the Middle East, Africa and Asia.
According to consultants ETFGI, there is approximately $395.6 billion (€367.9 billion) committed to physical ETFs in Europe, and $115.1 billion in synthetic ETFs.
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