db x-trackers To Offer ETF For Free (EUROPE)

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July 15, 2009 10:46am ETF BASIC NEWS

free-tradingDeutsche Bank’s exchange-traded funds unit is planning to offer one of its funds for free, Financial News reports. db x-trackers will drop the fees for investing in the DJ Euro Stoxx 50 ETF. The ETF, which is the company’s third biggest fund, has an annual total expense ratio of 0.15%. How are they able to achieve this no fee


 offering? Paul Amery from Index universe states: “db x-trackers made it clear in its press release yesterday that its DJ Euro Stoxx 50 ETF has outperformed the index by 0.61% per annum, post fees, since its launch in January 2007. The extra revenues that have caused this outperformance are achieved, in the words of Manooj Mistry, db x-trackers’ UK head, by “putting the stocks in the index to work” – in other words, lending them out – and by obtaining a better tax treatment of the dividends paid on the index component stocks than could be achieved by a passive investor located in Dublin or Luxembourg, where the ETF would typically be domiciled. By taking a slice of these revenues for itself, the bank can afford to charge a zero headline fee on the fund.”

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