DWS plans to boost active ETF business

DWS is looking to expand its active exchange traded funds business in Europe to stay “ahead of the curve” as a number of asset managers enter the space seeking to capitalise on demand.

Dirk Goergen, global head of client coverage, said active ETFs had not been a big focus area for the company in Europe, but there was increasing demand from clients for such products that they wanted to take advantage of.

Goergen, who is based in the US, said active ETFs played a “vital role” in the market there and the trend was likely to “spill over” into Europe.

“We are always very mindful and watching closely what kind of trends are happening in the US market,” Goergen said.

This article was previously published by Ignites Europe, a title owned by the FT Group.

“The [passive] game also started earlier in the US and then it spilled over to Europe, so there is a probability that also active ETFs are spilling over to Europe.”

Actively managed ETFs listed globally have gathered net inflows of $125.1bn over the first five months of 2024, according to ETFGI data. The majority of this activity relates to the US.

DWS currently manages nine active ETF products in Europe within its Xtrackers business, according to Morningstar.

“We launched active ETFs [in Europe] quite a while ago, but we have not focused on them so much,” Goergen said.

However, he said DWS had the “capabilities” in-house to expand.

“First and foremost, you need to be a strong ETF player, then you need to have an active platform. We are managing €300bn passive [and] roughly €500bn on the active site. For us, it’s a natural thing to combine those strengths.

“[Active ETFs] are something the team is focusing on and something we are going to execute, just to stay ahead of the curve.”

Goergen said there were new products in the “pipeline”, but exact numbers and timings were yet to be confirmed.

DWS’s stance on active ETFs stands in contrast to its closest rival Amundi, which has said it has no plans to seize on the growing demand for actively managed ETFs.

US passive giant Vanguard has also resisted pressure to launch active ETFs in Europe, while other companies, including BlackRock, Franklin Templeton and Axa Investment Managers, have entered the space.

Assets managed by active ETFs in Europe have doubled over the past three years, but they still make up only a small proportion of total assets under management in the region.

European active ETFs had total assets under management of €38bn at the end of April, Morningstar data shows.

Goergen also said DWS was looking to expand and diversify its alternatives business, having set up a capital solutions unit earlier this year to increase its capabilities in direct lending, leveraged loans and structured credit.

Acknowledging that the last year had been a “very difficult” environment to operate in, he said he was “optimistic” about the group’s performance.

DWS was gaining market share through Xtrackers and was focused on building new capabilities, such as in crypto ETFs and stablecoins, according to Goergen.

*Ignites Europe is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at igniteseurope.com.