Industry Updates

DWS cancels share splits on four ETFs amid fractional trading rise

Robo-advisers are offering increasingly sophisticated ETF trading solutions

Theo Andrew

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The rise of fractional trading by robo-advisers and wealth platforms has led DWS to call off the share split of four ETFs intended to boost retail trading.

In a notice to shareholders, DWS said it cancelled the proposals on two bond ETFs and two equity ETFs after it said it was no longer in investors’ best interests.

In January, the German asset manager announced its plans to split the shares – which increases the number of shares an investor owns without impacting the value – in a bid to “increase the accessibility of the shares to a wider segment of the market, in particular for retail investors”.

However, it later said the operational risks were now larger than the “diminishing benefits”.

A DWS spokesperson said: “Robo-advisers and fund platforms used by retail investors for ETF investments have increasingly found technical solutions to cover ETF shares or fractions of these shares even with smaller amounts.

“Therefore, the effort of a split of the ETF share – for example due to the need to change the ISIN – turned out to be greater than the expected benefits for investors through the split.”

The four ETFs are:

Fractional trading, which allows investors to buy a slice of an ETF or stock for any amount, has been a boon for ETF retail investing across Europe.

Trade Republic launched the service for ETFs in October last year allowing investors to own any increment of an ETF.

The lack of fractional dealing in the UK has been thought of as one of the main challenges to retail uptake in the market.

Wealth manager platforms currently lack the capability to accurately replicate their holdings at a fraction while online brokers such as AJ Bell believe the demand is not yet there.

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