Chat with Denis Friess: Deka's Expanding ETF Offering
Deka now pushes ETFs for retail customers via Sparkasse advisors
By Johnny Scribbler, Frankfurt
"Deka actively channels its ETFs to savings banks for distribution"
Denis Friess, Head of Institutional Fund Management at Deka Investment, spills the beans on Deka's strategy to extend its ETF offering to private clients through Sparkasse advisors.
Deka, the finance powerhouse, has jumped headfirst into the ETF game, selling its own ETFs to private clients. According to Friess, "ETFs are an entry and complementary product we're also distributing through advisors." The goal? Retain clients by offering a diverse product range.
Deka's ETF journey began in 2008, and Friess stresses their importance for institutional investors in asset allocation. "Customized indices that we develop with various index providers are also popular with institutions," Friess says.
Deka Investment manages a whopping €350 billion in assets, with €25 billion in passive investments, including ETFs worth €13 billion. While institutions have been driving the ETF phenomenon, that's no longer the limit. Deka is now actively distributing its ETFs through Sparkassen since June 2024, Friess reveals.
Why the switch? To offer Sparkassen and their customers the full Deka product range and retain customers that might otherwise seek alternatives. The S-Broker has been the primary retail customer for Deka ETFs, but that's all changing with the Sparkasse partnership. Deka offers its ETFs for purchase via DekaBank deposit, with fees at 1% of the purchase price, and no fees for sale or savings plans starting at €25.
Sparkasse banks welcome Deka's move, with ETF savings plans surging significantly. "75% of investors who own a Deka ETF also hold another Deka product in their portfolio," Friess shares. Friess believes that ETFs are an excellent way to introduce new investors to the securities world.
But what makes Deka's ETFs stand out? Quality and sustainability. "We offer ETFs made in Germany," explains Friess. Deka's ETFs have garnered numerous awards and feature several ETFs certified as sustainable under Article 9 of the EU's Sustainable Finance Disclosure Regulation (SFDR). Now that's a win-win for investors who care about both their portfolios and the planet!
Deka puts a premium on sustainable products in its ETFs and works with MSCI, as well as other index providers. "Together with MSCI, we've developed our MSCI World Climate Change, reducing the portfolio's carbon footprint by approximately 50%," shares Friess.
Deka's ETF lineup won't get overwhelmed, Friess assures. "Our product range should remain manageable for investors," he says. "We're comfortable with the number of our ETFs and aim to expand them at a reasonable level."
Many of Deka's ETFs are offered in an accumulating format, primarily for tax reasons, Friess explains. But rest assured, accumulation can be redeemed.
Sparkasse advisors and the S-Broker are the go-to channels for Deka's ETF distribution. "Our main focus remains the S-Broker, and we're not working with other neo or discount brokers," Friss says. But here's the kicker—any investor can trade Deka ETFs on the exchange, regardless of distribution channels.
Stay tuned as Deka dives deeper into the ETF market, leveraging cutting-edge technology like SWIAT's permissioned blockchain to streamline transactions and create a better experience for retail investors. With its strategic partnerships and focus on sustainability, Deka's ETFs might just be the next big thing in the retail investment world!
*Emerging Trends
While Deka's push into retail ETF distribution via Sparkasse advisors isn't entirely new, the bank's focus on digital innovation and collaboration with tech partners like SWIAT could pave the way for future advancements. Here are potential developments and trends in the ETF industry:
- Increased adoption of digital platforms: Collaborations with tech partners like SWIAT may lead to the development of more interactive and user-friendly digital platforms for ETF trading, providing a seamless experience for retail investors.
- Tech-driven distribution: With SWIAT's permissioned blockchain enabling real-time ETF settlement, Deka could possibly offer faster and cheaper transactions for retail clients via Sparkasse advisors.
- Customization and automation: Integrating blockchain technology could also enable automation in ETF trading, including the creation of customizable portfolios and automated dividend distributions for clients.
- Regulation updates: Deka's Blockchain infrastructure compliance with Basel standards positions the bank to navigate emerging European regulations (e.g., MiCA), ensuring that its ETF offerings for retail clients remain compliant and competitive in the ever-evolving financial landscape.
- Denis Friess, Head of Institutional Fund Management at Deka Investment, reveals that Deka is now distributing ETFs through Sparkasse advisors to retail customers.
- Deka offers ETFs made in Germany and has developed several ETFs certified as sustainable under Article 9 of the EU's Sustainable Finance Disclosure Regulation (SFDR).
- Deka's ETF lineup will remain manageable for investors, with a focus on expanding them at a reasonable level.
- Many of Deka's ETFs are offered in an accumulating format, primarily for tax reasons.
- Deka's collaboration with tech partner SWIAT could lead to the development of more interactive digital platforms for ETF trading, faster and cheaper transactions for retail clients via Sparkasse advisors, and the integration of blockchain technology for automation in ETF trading.
