ETF focus turns to Germany and continental Europe

by , 24th July 2018

Vanguard has launched a new ETF timed to coincide with the 30th anniversary of the formation of the leading German DAX index as the focus of global ETF providers in recent months has more clearly switched to Germany and continental Europe.

The Vanguard DAX UCITS ETF was launched last week and provides access to the 30 largest and most liquid companies in Germany. The fund comes with fees totaling 0.10%.

The launch comes a matter of weeks after Lyxor parent Societe Generale confirmed it had bought the ETF unit of Commerzbank. Meanwhile, Van Eck has recently bought its way into the European market with the Think ETFs acquisition.

Vanguard’s new fund comes after the company opened up a new office in Frankfurt in June.

Thomas Merz, head of distribution, Europe Ex-UK at Vanguard said the new fund represented an opportunity for investors both within and outside of Germany to benefit from the “opportunities provided by Europe’s largest economy.”

A spokesperson added that the push into continental Europe was all part of Vanguard’s mission to lower the cost of investing. “The focus will continue to be pan-European. Germany is our newest and youngest market, and therefore we will be building up the team there this year,” they added. “We will also continue to invest in expanding our presence and footprint across our other Continental European markets, where we have established offices in Netherlands, Switzerland and Paris.”

The spokesperson noted that Vanguard’s European ETF AUM currently stands at over $39bn.

Vanguard’s expanding European footprint has been accompanied by a number of senior hires.

These include the appointment of Simone Rosti as head of Italy, Liz Wright, Christophe Collet, and Rahul Thrakar joining as Senior ETF Specialists, and Gregoire Blanc signing on as senior ETF capital markets specialist.

Speaking to ETF Stream back in April, Thomas Bartolacci, head of European ETF capital markets, said that Switzerland, the Netherlands and Germany remained the company’s target markets on the continent.

“The products we are putting out there are broad-based, low-cost diversified product that fit no matter what the distribution method is or what the end client’s main objectives are,” he said at the time. “They will be able to be used in some capacity whether strategic or tactical. That ubiquitous nature of the ETF is what makes it such a powerful tool.”

Lyxor’s Commerzbank ETF unit acquisition catapulted the company to second position within the league table of European ETF providers ahead of DWS with its Xtrackers product.

Séverin Cabannes, deputy chief executive at Societe Generale, said at the time that the deal had a specific geographic benefit. “While complementing Lyxor’s ETF franchise, this acquisition would be transformational for our activities in Germany as it would enable Societe Generale to reach a new scale in the leading Eurozone economy.”

Further evidence of an increased focus on continental Europe also came from the confirmation of Van Eck’s buyout of Netherlands-based Think ETF in early July.  Think’s Martijn Rozemuller will now head up the Van Eck European team which also has offices in Frankfurt. ETF Stream will feature an interview with Rozemuller in the coming weeks.

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