World's first hedge fund ETF launches as investors seek liquidity
The world's first exchange traded fund based on actual hedge funds has launched, run by Deutsche Bank's ETF index tracking platform, db x-trackers, as demand for more sophisticated ETFs grows.
Stephane Farouze, global head of hedge fund derivatives at Deutsche Bank said: “For investors wanting access to hedge fund returns, this ground-breaking ETF offers unprecedented transparency and as well as intra day liquidity compared to at best monthly or even quarterly liquidity for a traditional hedge fund investment.”
Thorsten Michalik, head of db x-trackers said: “For the first time, investors will have liquid, UCITS III access to the hedge fund industry. Market participants will also be able to base their financial products on the ETF, as Deutsche Bank will be the market maker and will offer two way prices on and off the stock exchange.”
The bank said all hedge funds on the managed account platform are Jersey unit trusts listed on the Irish Stock Exchange, managed and administered by legally separate Deutsche Bank affiliates.
Third party hedge fund managers are sub-contracted to each platform fund as a trading adviser and their responsibility is to manage the portfolio for a given fund.
db x-trackers is the third largest ETF provider in Europe with over €19bn of assets under management since 2007.
At present there is $800bn in assets under management in ETFs worldwide and this is expected to grow as inflows from Europe, Asia and the Middle East offset slower growth in the traditional ETF market in the US.
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