db x-trackers MSCI AC Asia ex-Japan 1C

Fundamentale Analyse

China's breakneck growth seems to slowing. In the fourth quarter, China's economy realised 8.9% GDP growth, continuing the decelerating trend exhibited since Q4 2010 when GDP growth was at 9.8%. This deceleration stems from weakening export demand due to the tough economic climates in Europe and the US. In order to compensate for weak export demand, China's government has turned investment inward towards fixed-asset investment, which grew 23.8% in 2011 on the back of an 11.1% increase in investment by state-owned and state-controlled enterprises. Going forward, one of the largest challenges facing the Chinese economy is its reliance on fixed-asset investment as a primary engine of GDP growth. Some estimate that fixed asset investment accounts for 50% of current GDP. Given the rate at which capital spending continues to grow, it is hard not to question the long-term economic viability of these projects.

South Korea has a somewhat different story. Exports and increased domestic demand fueled high GDP growth (6.2%) for South Korea in 2010, but growth slowed in 2011 due to a deceleration in world trade and falling domestic demand culminating in a 3.4% year-over-year GDP growth rate for Q4. Adding cause for concern, South Korea imports all the oil it consumes. As a result, its trade balance is very sensitive to fluctuations in oil prices. Over the past year, rising oil and commodity prices have contributed to rising inflation across most of Asia. While South Korea weathered these price increases better than other countries in the region (e.g. inflation peaked in July at 4.7% before sliding back to 3.4% in January), inflation levels have only recently fallen inside the Bank of Korea's target rate set at 3% plus/minus 1%. Looking long-term, the outlook for Korea is largely positive following the formation of a trade pact with the EU worth roughly $30 bn in new trade. Regulatory restrictions and 98% of duties imposed on trade between the EU and Korea will be removed to make it more efficient for Korean and EU firms to open operations within each other's borders.

The trajectory of Taiwan's economy hinges on export demand, and as such, its economic performance was particularly sluggish in 2011 as the developed world deleveraged and choked down austerity measures. Specifically, Taiwan's export growth fell sharply during the course of 2011 from 8% in Q1 to 0.3% in Q4. On the heels of falling export growth, Taiwan registered 4.03% GDP growth for 2011, failing to meet market expectations of 4.5-5%. Looking ahead to 2012, Taiwan projects GDP growth to weaken further towards 3.9% due in part to projections for lethargic export growth of 3.2%. On the positive side, Taiwan's trade relationship with China has dramatically improved via the Economic Cooperation Framework Agreement (ECFA). Trade across the Taiwan Straits has never been better with reduced tariffs on hundreds of products on both sides.

Indexkonstruktion

The MSCI AC Asia ex-Japan NR index is a free-float adjusted market capitalisation weighted index designed to measure the equity market performance of Asia, excluding Japan. Because closely held firms will have a smaller piece of their aggregate market capitalisation floated on public exchanges, the free float adjustment serves to ensure the underlying liquidity of the holdings is superior relative to a pure market capitalisation weighting. Components must meet minimum criteria for liquidity, foreign ownership, as well as a waiting period for newly-listed stocks. The index is reviewed quarterly, but the May and November semi-annual reviews tend to be more comprehensive than the February and August reviews. As of this writing, there are 616 companies included in the index. Equities from China, South Korea, Taiwan, Hong Kong, and India combine to make up approximately 81% of the index. The top sector weighting is financials (~30%), followed by information technology (~17%), industrials (~11%), and consumer discretionary (~10%).

Fondskonstruktion

The db x-trackers MSCI AC Asia ex-Japan TRN Index ETF uses synthetic replication to achieve exposure to the performance of the MSCI AC Asia ex-Japan index. The fund engages in a fully-funded swap with its parent company, Deutsche Bank, whereby the fund transfers cash from investors to Deutsche Bank in return for the performance of the benchmark index. In addition, the swap counterparty posts collateral to a segregated account held at State Street Bank and pledged in favor of the fund. For equity ETFs, db x-trackers accepts a mix of sovereign and investment grade bonds and highly liquid blue-chip stocks from OECD countries as collateral. Haircuts are applied to the securities posted as collateral and as such collateral levels are maintained between 107.5% and 120% of the fund’s NAV at the end of each business day. While the funded swap structure does not imply direct fund ownership of the collateral basket, db x-trackers’ ETFs are entitled by Luxembourg law to enforce the pledge and sell collateral assets without prior notice to Deutsche Bank. db x-trackers does not engage in securities lending, which helps to mitigate some counterparty risk. Dividends received from the underlying holdings are immediately reinvested preventing any cash drag. The fund is domiciled in the Luxembourg and its base currency is USD.

Gebühren

db x-trackers levies a 0.65% total expense ratio (TER) for the MSCI AC Asia ex Japan TRN Index ETF, which is on par with other ETFs tracking this same index.

Alternativen

As of this writing, there are a significant number of ETFs tracking the Asian equity market. In seeking Asian equity exposure, investors should primarily consider their desired level of index concentration from both a sector and geographic perspective. Investors seeking more concentrated exposure to Asia's emerging markets can consider ETFs that track the MSCI EM Asia index. The largest and most heavily-traded ETF tracking the index is the db x-trackers MSCI EM Asia TRN Index ETF. The fund charges a TER of 0.65%. With this fund, investors trade off exposure to Hong Kong for increased exposure to China, South Korea, Taiwan, and India.