Deutsche Bank is a leading global investment bank with a strong private client franchise. A leader in Germany and Europe, the bank is continuously growing in North America, Asia and key emerging markets. With more than 100,000 employees in 74 countries, Deutsche Bank offers unparalleled financial services throughout the world. The bank competes to be the leading global provider of financial solutions, creating lasting value for its clients, shareholders, people and the communities in which it operates.
In response to increasing investor demand for alternative Ucits-compliant products, Deutsche Bank decided to launch a Luxembourg-domiciled Ucits III variation of Winton Capital Management’s Diversified Trading Program, a systematic trading system, in June 2010 on its dedicated Ucits platform, DB Platinum IV. The result was the DB Platinum IV dbX Systematic Alpha Index Fund.
The Winton Diversified Trading Program has been running since 1997. The firm places great emphasis on scientific research in financial markets, with some 90 staff at its research offices in Oxford, London and Hong Kong.
The dbX Systematic Alpha Index offers exposure to global futures, forwards and options markets. Winton selects the index components, providing exposure to approximately 100 global exchange-traded markets for commodities including energies, base and precious metals and crops, equity indices, bonds, short-term interest rates and currencies.
The Systematic Alpha Index is a Ucits III-compliant financial index whose components are selected by Winton using the Diversified Trading Program. The index can be exposed to the same instruments and follows the same strategy as Winton’s system. The Ucits fund therefore gives institutional and financially sophisticated investors a strategy that while linked, does not give direct exposure to the Diversified Trading Program. As the index sponsor, Deutsche Bank calculates the index independently of Winton.
“We have seen a huge interest from investors since we launched the product in June,” says Tarun Nagpal (pictured), European head of global fund derivatives at Deutsche Bank. “Winton’s long-standing reputation has made this product particularly attractive to investors who want to access the returns of a hedge fund in a Ucits III format.”
As it is based on a quantitative strategy, developing a Ucits-compliant version of the Winton flagship fund required a good degree of innovation. Deutsche Bank’s objective was to give investors exposure to Winton’s expertise and track record in a Ucits III-compliant format that brings the benefits of enhanced liquidity, and deliver a similar level of performance to that of the Diversified Trading Program.
“It was key to allow Winton to invest in the same instruments and with the same general strategy as its Diversified Trading Program while complying with Ucits requirements and, at the same time, to attend to investors’ desire to address the tracking error between the Ucits fund and Winton’s flagship fund,” Nagpal adds.
Adds Nagpal: “Deutsche Bank has been structuring Ucits III funds since hedge funds started using the wrapper in 2001 and we are delighted that our efforts have been recognised by the Hedgeweek award. The structured products team and the global prime finance synthetic financing group work closely together to provide a variety of solutions to suit hedge funds’ needs, and they should both be acknowledged for their efforts in winning this award.”
DB Funds currently has more than 60 Luxembourg- and Dublin-domiciled funds with assets under management of EUR12.55bn at the end of 2010.
This advertisement has been prepared solely for information purposes and does not constitute an offer or a recommendation to enter into any transaction. Investments in the fund 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 Deutsche Bank fund may go down as well as up and investors may not get back their original investment. The Fund is intended for financially sophisticated investors who, based on their own investment expertise or that of their financial advisor, understand its strategy, characteristics and risks. The Fund bears counterparty risk from swap transactions, limited to a maximum of 10% of the Fund NAV according to Ucits III rules. The Fund’s swap counterparty is Deutsche Bank AG.
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