09 Mar 2011, Clare Dickinson, Structured Products
Deutsche Bank listed its Global Fund Supporters exchange-traded fund (ETF) on the London Stock Exchange yesterday. The fund, launched in Frankfurt in November, already has assets under management of around US$5.4 million.
The ETF tracks the Dow Jones Global Fund 50 Index, which compiles the top 50 supporters of the Global Fund to Fight Aids, Malaria and Tuberculosis. The Fund was created in 2002; it works to raise money and resources to prevent and treat the diseases in 150 countries worldwide.
All fees from the ETF (minus costs) will go to the Global Fund. "We have had some success working with private companies," said Robert Filipp, head of innovative financing at the Global Fund in Geneva, speaking at the London launch of the ETF at the London Stock Exchange.
"We thought why not use this support we have across the private sector and turn it into a financial product… Investors are wary of the performance of 'do good stuff'; by creating an index that has the top 50 companies – a highly diversified group of companies – we are able to deliver a market expectation."
He described a "win-win" where the investor supports a good cause and gets a return from it.
The index is highly correlated to global benchmark indexes, explained Arne Noack, structurer with db X-trackers (Deutsche's ETF platform) in London. It has 95% correlation with the Dow Jones Global Index and 96% correlation with MSCI The World Index.
"Sometimes SRI [socially responsible investing] can be seen by investors as a niche area, we want to present this product and index – you can not only support the cause of a charitable organisation, but you can receive market returns," he explained.
Filipp said there may be other products to follow based on the Global Fund. "ETFs are cheap to sell… they are a good product to try, to show it can work." Filipp described this as the first of much more to come in terms of innovative finance.