World's
First Active ETF to be Launched in Germany
By
Jim Wiandt, Site Editor
The
seemingly inevitable has come to pass. IndexFunds.com has learned
that the world's first actively-managed exchange-traded funds will
soon be launched in Germany.
11 new
funds are scheduled to begin trading on the Frankfurt exchange's
Xetra platform on November 20. The fund manager will be DWS Investment,
an arm of Deutsche Bank in Germany. Unfortunately no information
about how the funds work logistically was immediately available.
Exchange-traded
funds (ETFs) are mutual funds that can be bought and sold like
stocks. Until now, all ETFs were based on indexes with known, quantifiable
component stocks. U.S. fund managers have been aggressively pursuing
efforts to launch actively-managed ETFs. AMEX is hoping to host
the first launch of actively-managed ETFs sometime in 2001.
Thus far, logistical
and regulatory hurdles have stymied all efforts to launch active
ETFs. Of particular concern has been the issue of how disclosure
of the underlying stocks would work. While active managers clearly
do not want the market to be aware of which stocks they are buying
and selling in real time, it is critical for investors to be aware
of precisely what the net asset value (NAV) of the underlying stocks
is, so that they can trade the ETF shares based on that value.
According
to a DWS
press release, the 11 funds to be launched initially will consist
of broad German, European, Asian, U.S., and global funds, as well
as Biotech, Internet, Pharmaceutical, U.S. Technology, New Markets,
and Gold funds.
Deutsche
Börse's existing exchange-traded funds have seen trading volumes
nearly triple from 6.8 million to 18.5 million shares per day since
launch seven months ago. For October, ETFs saw volumes of 408 million,
about 135% over the previous month's volume and an all-time high.
Volker
Potthoff, member of the executive board of Deutsche Börse, feels
that the new funds will be a boon to investors, "We think that a
diversified portfolio makes a good hedging instrument for investors.
With these active funds, there are no front load costs and it is
easier for an investor to get out of an investment portfolio."
11/16/2000
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