debt

DeAWM launches new Investment Grade Subordinated Debt ETF

Deutsche Asset & Wealth Management has expanded the db X-trackers suite of ETFs with the launch of the db X-trackers Solactive Investment Grade Subordinated Debt Fund (SUBD). 

The new ETF, which tracks a subordinated debt index, offers investors uncomplicated access to investment-grade subordinated bonds, which have the potential to produce higher yields than equivalent unsubordinated bonds and may provide attractive returns to investors capable of taking on additional risk.

“Our goal for the db X-trackers suite of products has always been to offer investors the means to easily gain exposure to various investment opportunities,” says Fiona Bassett, Deutsche Asset & Wealth Management Americas Head of Passive Asset Management. “With the addition of SUBD to our platform, we continue to bolster our fixed income offerings, growing the number of investment options available.”

SUBD tracks the Solactive Subordinated Bond Index, a rules-based, market value-weighted index designed to track the investment-grade, subordinated corporate bond market of U.S. dollar-denominated corporate securities classified as subordinated or junior subordinated. As of April 30, 2014, the Index is comprised of 137 constituents representing approximately 70 parent companies with USD169 billion in total amount outstanding.

By tracking the subordinated, investment grade debt mirrored by the Solactive Subordinated Bond Index, SUBD is designed to provide higher yields via bonds of investment-grade companies. The higher yields are produced by the subordinated nature of the bonds rather than by using junk bonds. The fund will be subject to marginally higher credit risk due to its investments in subordinated debt.

Astrid Ludwig, Head of the Bond & Complex Team, Solactive, says, “We are excited to support Deutsche Asset & Wealth Management as they launch another innovative fund tracking a Solactive branded index. In a context of historically low interest rates, the Solactive Subordinated Bond Index is tracking a market which offers an interesting compromise between yield and risk.”

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