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Deutsche joins the credit index-linked investment fray

Exchange traded funds

Deutsche Bank is the latest entrant to the growing market for European credit index-linked investment products.


Following the launch in March of JPMorgan's Jeci instrument and Morgan Stanley's Euro Tracers, Deutsche has unveiled its own innovation - the Xavex Dynamic Bond Portfolio Fund.


The exchange-traded fund, which has a five-and-a-half-year life and is initially being marketed to German private investors, is the first product of its kind to be based on the indices of the iBoxx consortium. It will be listed on the Deutsche Börse on May 22.


Whereas the JPMorgan and Morgan Stanley products were based on the banks' own credit market indices, Deutsche believes that the perceived independence and transparency of the iBoxx indices will give its instrument added credibility.


iBoxx is owned by eight banks - ABN Amro, Barclays Capital, BNP Paribas, Deutsche Bank, Dresdner Kleinwort Wasserstein, Morgan Stanley and UBS Warburg - as well as Deutsche Börse.


"iBoxx is a multi-contributor, independent pricing source," says Michele Faissola, global head of OTC derivatives at Deutsche Bank. "Compared with any other index out there, there is basically no risk of manipulation."


Dominant iBoxx

Of the eight indices that make up the Dynamic Bond Portfolio Index, five are Deutsche's - covering corporates and emerging markets.







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