Deutsche Bank Wealth Management is launching a series of strategic asset allocation (SAA) exchange-traded funds (ETFs) in Europe that are designed to address the challenges of unstable market cycles.

While discretionary investments typically focus a lot on tactical positioning to meet or exceed market benchmarks with a medium-term horizon, the new funds enable clients to access and invest in the long-term view of the wealth management chief investment officer’s team, including structural economic shifts lasting a decade or more.

Clients also have the option to invest in funds using Deutsche Bank’s systematic hedging strategies, known as risk-return engineering, which is designed to add downside protection.

The funds are particularly cost-efficient because they invest in low-fee ETFs using open architecture and are built to minimise the need for frequent rebalancing. They are wrapped in-house by Deutsche Bank’s asset management arm DWS.

“Wealth management clients are looking for robust and efficient ways to protect themselves and their families from the kind of volatility we have seen recently because of the coronavirus,” says Claudio de Sanctis, global head of Deutsche Bank Wealth Management

“The 'Plus' strategy SAA funds include our risk return engineering strategy, which has a long track record in efficiently managing downside risk while minimising the hedging costs via listed options,” points out Alessandro Caironi, head of advisory & sales at Deutsche Bank Wealth Management. “This is ideal right now as it allows investors to increase their exposure to growth assets while maintaining a more conservative risk profile.”

The majority of long-term portfolio returns are attributable to strategic asset allocation, making it key to managing multi-asset portfolios. Subscriptions for the funds begin this week in Germany, Luxembourg and Switzerland, and the first net asset value will be calculated on April 30. The funds will be rolled out in other European countries and Asia later this quarter.