European ETF growth levels to be sustained in 2015, says Deutsche AWM 1

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1 Press Release London January 21, 2015 European ETF growth levels to be sustained in 2015, says Deutsche AWM 1 The European ETF market is expected to expand 15-20% 2 in 2015, according to Simon Klein, Head of Exchange Traded Product Distribution & Institutional Mandates, EMEA and Asia, at Deutsche Asset & Wealth Management (Deutsche AWM), speaking at a press conference in Frankfurt. With billion 3 in ETF assets under management, ETFs currently account for some 3.3 per cent 4 of total fund volumes in Europe. As well as innovation to provide investors with new types of market exposure in ETF format, other anticipated growth drivers in 2015 will be the range of additional services ETF houses can provide clients, and strong price competition 5, noted Klein. Genuine innovation in the ETF industry means providing access to new markets that were not previously open for investment, and facilitating previously unavailable exposures, said Klein, adding that services are an aspect that can tip the scales for professional investors when they are choosing between providers of identical or similar products. Additional services can include providing model portfolios. On top of portfolio construction, this can also mean the delivery of key data, statistics, and analysis of historical performance. It is also important that an ETF provider supports trading for professional clients so ETF trading costs can be kept as low as possible. Klein regards ETF cost efficiency as an important factor in last year s market growth. In 2014 we were the first ETF provider in Europe to launch a Core-ETFs 6 range. 7 This was an important dynamic in our winning new clients for whom ETFs have now become a first-choice Seite and-beyond.pdf 6 Definition Core ETF Range: Core ETFs are ETFs with competitive flat fees p.a., allowing investors to participate in performance of internationally important Blue Chip indices, e.g. DAX. These ETFs often form the "core" of a diversified portfolio and are mostly buy and hold in nature. 7 und

2 for passive exposure for example, as a substitute for futures and institutional mandates, Klein explained 8. Additional highlights of the press conference include: 1) The market should see disproportionate growth in demand for bond ETFs The Passive team at Deutsche AWM expects to see strong growth in bond ETFs 9 in 2015, especially in the high-yield segment, such as short-maturity euro-denominated high-yield corporate bonds. With prevailing low interest rates, professional investors need investment solutions that deliver an adequate risk/return profile but also good liquidity, said Klein. Bond ETF assets under management (AUM) increased by 41% in 2014, while equity ETF AUM went up by 22% 10. Above-average AUM growth rates are anticipated to continue in the bond segment 11. Deutsche AWM recorded some 1.5 billion net inflows into its bond ETFs in ) ETF investment solutions will be crucial for the private client segment Klein believes there is a need for more ETF investment solutions for private clients. These include, for example, ETF fund-of-funds or managed accounts - individual accounts that are generally professionally managed by an asset manager according to the client s specific criteria and preferences. 12 One factor in ensuring there is a breakthrough with private clients is the total number of ETF-based product solutions. We want to see product providers develop these types of solutions, Klein explained. 3) ETFs are increasingly used within active management In his experience, more active asset managers are using ETFs, noted Klein, adding that with equity markets regularly experiencing periods of volatility spikes, ETFs are being more widely used for taking active decisions based on an asset allocation framework. Meanwhile, the strategic beta product arena is a good example of how rules-based investment styles using ETFs can be a way of achieving outperformance compared to classic 8 Pressemitteilung-DeAWM-senkt-Gebuehren-bei-wichtigen-db-X-trackers-ETFs-finalclean.pdf. Compare also en-emea-rc-press-release.pdf Source: Deutsche Bank AG Research, 24 December bb1045ff910/European-Weekly-ETF-Market-Review.pdf compare also

3 market returns. But even with the growth potential 13 of strategic beta, the task of educating investors in this area is still enormous. 4) Deutsche AWM ETFs achieved strong net inflows in 2014 Deutsche AWM achieved 4.2 billion in inflows in 2014 (Source: Deutsche AWM). During November, the most successful month of the year for Deutsche AWM ETFs in terms of inflows, Deutsche AWM garnered some 30 per cent of the European ETF market s new assets 14. In 2014 our growth strategy had three key elements, said Klein. First we converted our most popular and largest ETFs into physical replication. Second, we launched innovative ETFs, such as our physical China A-shares ETF, and the first ETF to provide exposure to the global investment-grade bond market. Third, we won new clients because of our attractively priced Core-ETFs range. The high level of net inflows demonstrates that our growth strategy is the right one. Deutsche AWM is now Europe s second largest provider of physical ETFs 15, with AUM in direct replication ETFs of 17.7 billion. In total, Deutsche AWM manages ETF assets of billion (as at ). 16 For further information please contact: John Ferry Tel: +44 (0) john.ferry@db.com Annette Matzke Tel: / annette.matzke@db.com Deutsche Asset & Wealth Management With EUR 1 trillion of assets under management (as of September 30, 2014), Deutsche Asset & Wealth Management¹ is one of the world's leading investment organizations. Deutsche Asset & Wealth Management offers individuals and institutions traditional and alternative investments across all major asset classes HEC_Publication_ European_ETF_Survey_2013.pdf&rct=j&frm=1&q=&esrc=s&sa=U&ei=97yuVMXwJcLiO- 2pgbAJ&ved=0CBQQFjAA&usg=AFQjCNFK8l3X4HIMHMY8VNs8jPa36SYu6Q page

4 It also provides tailored wealth management solutions and private banking services to high-networth individuals and family offices. ¹ Deutsche Asset & Wealth Management is the brand name of the Asset & Wealth Management division of the Deutsche Bank Group. The legal entities offering products or services under the Deutsche Asset & Wealth Management brand are listed in contracts, sales materials and other product information documents. Key risks Investors should note that the db X-trackers UCITS ETFs are not capital protected or guaranteed and investors should be prepared and able to sustain losses of the capital invested up to a total loss. The Equity Factor ETFs are designed for knowledgeable and experienced investors who are able to understand and evaluate the Funds factor-based investment strategies and inherent risks and, in particular, are able to assess how the underlying indices are expected to perform in a range of market cycles. Factors perform differently under certain market conditions. Investors must carry their own assessment as to when to gain or to cease exposure to these factors depending on their own assessment and understanding of market conditions. Shares in db X-trackers UCITS ETFs which are purchased on the secondary market cannot usually be sold directly back to the relevant fund. Investors must purchase and redeem such shares on the secondary market with the assistance of an intermediary (e.g. a market maker or a stock broker) and may incur fees for doing so (as further described in the applicable prospectus). In addition, investors may pay more than the current net asset value of a share in a db X-trackers UCITS ETF when buying shares on the secondary market, and may receive less than the current net asset value when selling such shares on the secondary market. Investments in funds involve numerous risks including, among others, general market risks, credit risks, foreign exchange risks, interest rate risks and liquidity risks. The value of an investment in a db X-trackers UCITS ETF may go down as well as up and investors may not get back the full amount of their original investment. Important Notice. This press release has been prepared solely for information purposes and does not constitute an offer or a recommendation to enter into any transaction. Please refer to the relevant fund s full prospectus and the latest version of the Key Investor Information Document for more information on Deutsche Bank exchange traded funds. These documents are available free of charge from Deutsche Bank, London Branch. Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin Federal Financial Supervising Authority) and is regulated by the Financial Conduct Authority for the conduct of investment business in the United Kingdom. The registered address of Deutsche Bank AG, London Branch, is Winchester House, 1 Great Winchester Street, London EC2N 2DB. Any

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