Hanging Out with Denis Friess: Deka's Expansion into ETF Retail Distribution
By streetwise scribe, Berlin
Deka Actively Disperses Exchange-Traded Funds Via Savings Banks
Denis Friess, Head of Institutional Fund Management at Deka Investment, is spilling the beans on why Deka has decided to push its ETF offerings to retail clients through Sparkasse advisors.
"Deka aims to offer a complete product spectrum to Sparkassen and their clients," Friess announced in an exclusive interview with Markt area. Friess wants to retain existing clients who might venture elsewhere if Deka didn't offer ETFs. So far, the primary client for Deka ETFs in retail distribution has been the S-Broker.
But why the sudden switch now? Let's dive in!
The Deka ETF Offering
Deka has been offering ETFs since 2008. For institutional investors, ETFs play an essential role in asset allocation and require passive mandates. Deka boasts a broad range of indices, developed in tandem with various index providers – customized indices that are in high demand.
According to Friess, Deka Investment manages assets exceeding €350 billion, with €25 billion assigned to passive investments, the majority of which are held in ETFs (€13 billion). With an increasing number of institutions seeking passive investment options, the move towards retail distribution is a strategic attempt to tap into this demand.
Getting Retail on Board
Starting June 2024, Deka will actively distribute its ETFs through Sparkassen, complementing existing offerings. "We want to provide Sparkassen clients access to our full range of products, from traditional offerings to ETFs," said Friess, emphasizing the importance of advice, even for first-time investors, in helping build securities affinity through efficient capital investment.
Of the clients who currently own a Deka ETF, an impressive 75% also hold another Deka product in their portfolio. The incorporation of ETFs into retail distribution is likely to bolster growth in this area.
German-Built Quality
Friess reaffirmed that Deka's ETFs, which have earned numerous awards, are high-quality products. The ETFs are all issued in Germany, follow full replication, and avoid swaps and securities lending. Sustainable ETFs are a key priority for Deka, with a focus on reducing carbon footprints through ETFs like the MSCI World Climate Change, which cuts carbon emissions by around half.
A Manageable Product Range
In addition to standard ETFs tracking stock indices such as the DAX, Euro Stoxx 50, MSCI World, S&P 500, and Nasdaq 100, Deka's ETF range will remain manageable to help investors make informed decisions. Friess mentioned that Deka is content with the current number of ETFs and is planning to expand them gradually.
Accumulating ETFs will be available, primarily for tax-related reasons, and investors can reinvest distributions if they choose to.
The Deka Advantage
Deka ETFs are already actively distributed through Sparkassen and the S-Broker, with the S-Broker currently being the main focus. Traders can purchase Deka ETFs on the exchange independently of this distribution relationship. ETFs can be simple entry or complementary products for investors, serving their diverse needs more effectively.
Blockchain and Beyond for Deka
While the focus on retail ETF distribution is new, it's worth noting that DekaBank – a part of the Sparkassen-Finanzgruppe – recently joined in a EUR 100 million blockchain-based covered bond issuance through its SWIAT platform. This may hint at broader digitization efforts for retail financial products in the future.
In addition, the unique Sparkasse Hanau Grimmfonds, developed by Deka, showcases a tech-driven thematic fund approach that promises to blend traditional assets with crypto-related exposures. This focus on novel product segments could potentially translate to innovative ETF developments in time.
All in all, Denis Friess's insights open a door to Deka's vision of expanding its ETF reach to retail clients through strategic partnerships. The success of this effort remains to be seen as Deka continues to push forward with its forward-looking product strategies.
- Denis Friess, from Deka Investment, aims to offer a complete product spectrum to Sparkassen and their clients, including ETFs, as a strategic attempt to retain existing clients and tap into the increasing demand for passive investment options.
- According to Friess, Deka Investment manages assets exceeding €350 billion, with €13 billion invested in ETFs, which are especially popular among institutional investors for their role in asset allocation and passive mandates.
- Starting June 2024, Deka will distribute its ETFs through Sparkassen, providing their clients access to a full range of products and potentially bolstering growth in the area.
- Deka's ETFs, which have earned numerous awards and are all issued in Germany, follow full replication and avoid swaps and securities lending. Sustainable ETFs, such as the MSCI World Climate Change, are a key priority for Deka, with a focus on reducing carbon footprints.
