db x-trackers is evident as its five exchange-traded funds (ETFs) have grown to such an extent that they now have more than R10bn in assets under management (AUM). Its US-linked ETF, with AUM of R3.3bn, is proving the most popular. The other options are UK, Japan, Eurozone and World.
Wehmeyer Ferreira, head of db x-trackers South Africa, says the World Index ETF offers a great opportunity for investors to diversify their portfolios. “There are things playing out all over the world that are negative to a degree for equity markets. The benefit of a world fund is that you get access to a broad base to spread risk around.”
Currently, the World ETF is skewed towards the US, which makes up 57% of the country allocation. Other major markets include Japan (9%) and the UK (8%), while Canada, France and Switzerland account for 4% respectively, and Germany and Australia for 3% each. On a sector basis, 23% of the fund is invested in non-cyclical consumer businesses, 21% in financial, 11% in industrial and 11% in cyclical consumer businesses.
With the rand at 14-year lows, is it wise to invest in a fund that is denominated in US dollars? Ferreira says db x-trackers advise investors not to look at the value of the rand in absolute terms. “We advocate that, if the majority of your savings are based in South Africa, you have substantial rand exposure. We are great believers in diversification, in terms of country and currency exposure.”