Industry Updates

DWS shuts European CDS ETF

XTXC will cease trading on 26 April

Theo Andrew

Locked shutters closed business

DWS has closed its European credit default swap (CDS) ETF despite gathering almost £43m assets under management (AUM).

The Xtrackers II iTraxx Crossover Swap UCITS ETF (XTXC) will delist from the Deutsche Boerse, Six Swiss Exchange and Borsa Italiana on 21 April before closing fully five days later.

Credit default swaps, which payout if a company defaults, were shunted into the spotlight last Friday after Deutsche Bank's CDSs spiked, leading to a sharp drop in its share price with fears spreading across the European banking sector.

XTXC, which tracks the Markit iTraxx Crossover 5-year Total Return index, did not have any exposure to Deutsche Bank according to its latest published holdings.

In a shareholder notice, DWS said: “The board of directors deems it appropriate to reduce the range of ETFs the company offered to investors.

“XTXC has had persistently low demand and its NAV has remained at too low a level for an extended period of time to be viable to be operated efficiently. Consequently, the board of directors has decided to close the sub-fund effective 26 April.”

DWS has closed several of its ETFs this year in a bid to improve the efficiency of its range.

In February, the German asset manager terminated its £62.3m Xtrackers MSCI Europe Energy ESG Screen UCITS ETF (XSER) after changes by MSCI left it with an “extremely small number of constituents” following the index rebalance on 1 March.

MSCI tightened the sustainability metrics of its index which meant XSER no longer met UCITS requirements.

Earlier in the month, the group shut the Xtrackers iTraxx Europe Swap UCITS ETF (XTXE) and the Xtrackers EUR Credit 12.5 Swap UCITS ETF (D3V3).

At the time, DWS said the closures were part of its “normal platform maintenance work” and added the firm launched 50 new Xtrackers ETFs in 2022.

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