Deutsche Bank Wealth Management is launching a new series of strategic asset allocation (SAA) funds, which will be brought to Asia in the second quarter, according to a statement from the firm today.
The funds invest in low-fee ETFs from all product issuers and are built to minimise the need for frequent rebalancing, the firm said. They are wrapped in-house by Deutsche Bank’s DWS arm, the statement noted.
Subscriptions for the funds begin this week in Germany, Luxembourg and Switzerland and the first net asset value will be calculated on April 30.
This move is in response to demand from clients for “simple, cost-effective, long-term investment portfolios designed to address the challenges of unstable market cycles”, the bank said.
“Wealth management clients are looking for robust and efficient ways to protect themselves and their families from the kind of volatility we have seen recently because of the coronavirus,” Claudio de Sanctis, global head of the firm, said in the statement.
The firm noted that the SAA funds will be guided by the chief investment officer’s team views “including structural economic shifts lasting a decade or more”.
Clients also have the option to invest in funds using “risk-return engineering”, which the bank defines as increasing exposure to growth assets while maintaining a more conservative risk profile.
The firm differentiates its new series from conventional SAA portfolios, which rely on “forecasting the returns and volatility expected from each asset class, and how the price of each asset class is expected to move in relation to the others. A calculation is then made about which combinations of asset classes have the highest potential for a given level of risk.”
The difference with the bank’s new SAA portfolios — which it hopes will make the products attractive during volatile markets — is that they factor in “the level of uncertainty that can be applied to each parameter of each forecast”, the firm said, but did not explain further.
“Effective SAA does not claim to have perfect knowledge of future asset class returns,” Christian Nolting, global chief investment officer, said in the statement.
“However, we do it not only via analysis of risk and return, but also through an in-depth understanding of correlations between asset classes.”
FSA contacted the firm for more information but a spokeswoman said it was unable to reply in time for publication.
Asia footprint
In total, DWS has 20 SFC-authorised funds for sale in Hong Kong. Among them, only three are actively-managed products, according to FE Fundinfo.
In Singapore, the firm has 100 products for accredited investors, 54 of them ETFs. The firm also provides 11 funds for retail investors in the Lion City, only one of them being passive product, FE Fundinfo shows.
In October last year, DWS applied to the Monetary Authority of Singapore (MAS) to launch the Invest Global Agribusiness Fund.
The product has received approval from the MAS for retail sales, but has not been launched.
Deutsche Bank is struggling through a massive restructuring. In July last year, the bank said it would cut 18,000 jobs, driven by the closure of its loss-making equities operations and the reduction of its fixed income capital allocation. Officials said that Asia wealth management will not be affected.
