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New US ETFs from Deutsche focus on sectors


Deutsche Asset Management has added six new ETFs to its range of Xtrackers, providing investors with cost-effective exposure to the US equity market. The sectors covered by the new ETFs are energy, healthcare, information technology, consumer, discretionary and consumer staples. The new ETFs are based on the MSCI USA indices.

Deutsche, like many other providers in the ETF industry, is very focused on pricing as a competitive edge. All the new ETFs have an all-in fee of 0.12%.

The latest launch complements the existing Xtrackers equity sector ETFs, which provide exposure to global sectors and to European sectors.

“As ETFs are increasingly being used as tactical asset allocation tools, there is demand from investors for granular exposure on a sector basis,” explains Michael Mohr, head of ETF produce development at Deutsche AM. “These very competitively priced ETFs on US sectors will help meet that demand.”

Earlier this year, Deutsche’s quantitative research group published a white paper which demonstrated how sector ETFs can be used to establish sector rotation strategies. It also showed how ‘equity factors’ like momentum and value can be used as signals to rotate sector exposures.

What is sector rotation?

Sector rotation involves shifting money from one entire sector to another. Traditionally this was achievable by very large mutual funds, that had the clout to sell out of numerous companies in a sector and start buying into another one. Investors will use a number of measurements to try to gauge whether a sector as a whole is losing speed, rather than focusing on individual companies. The concept is based on the premise that not all sectors in a single market behave in the same way.

The new ETFs were listed on the Deutsche Boerse in Frankfurt last Friday, and list on the London Stock Exchange today.

For more on trading ETFs, visit our ETF pages.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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