Industry Updates

Vanguard drops DAX index on Germany ETF three months after Wirecard scandal

VGER tracks the FTSE Germany All Cap index

Tom Eckett

a large stone structure with statues on top with Brandenburg Gate in the background

Vanguard has dropped the DAX index on its Germany ETF in favour of a far broader exposure covering the entire market cap.

The Vanguard Germany All Cap UCITS ETF (VGER), which has gathered €44m assets since launch in July 2018, will now track the FTSE Germany All Cap index, the first ETF to do so in Europe.

Instead of exposure to 30 large-cap stocks through the DAX, the index tracks around 155 large, mid and small-cap stocks which cover approximately 95% of the German market.

Vanguard has kept the total expense ratio (TER) at 0.10%.

Sebastian Külps, head of operations in Germany and Austria at Vanguard, commented: “The benchmark change provides investors with exposure to the broader German equity market, with investments across large, mid and small-cap stocks. 

“By offering access to about 95% of the German equity market through a single product, our investors can follow our philosophy of being as broadly diversified as possible.”

The decision comes just months after the DAX was hit in June when German payments company Wirecard announced it was missing €1.9bn.

STOXX, now owned by Qontigo, subsequently removed Wirecard from the DAX after it changed the rules allowing insolvent companies to be deleted with two trading days’ notice.

There are a number of ETFs in Europe that track the DAX including the €5.7bn iShares Core DAX UCITS ETF (DAXEX), the €3.5bn Xtrackers DAX UCITS ETF (XDAX) and the €987m Deka DAX UCITS ETF (ETFDAX).

Deutsche Boerse is currently consulting with market participants on proposals to changes to the DAX rulebook.

One suggestion, as reported in Manager Magazin, is the number of holdings in the DAX could be increased to 40 in order to remove some concentration issues of the index.

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