Deutsche Bank delists SCM’s fund of ETFs

At the end of August, DB X-trackers sent information to clients stating that 10 exchange-traded commodities and 26 ETFs, including the SCM fund, were to be delisted owing to their small size.

However, Mr Miller said his fund-of-funds ETF, at £3.3m, was not only sizeable enough to compete but also had achieved 18 per cent growth since launch on 6 February 2012.

This compared favourably against the three-year 16.1 per cent bid-to-bid mean growth shown for the Investment Association Targeted Absolute Return sector, according to data from FE as at 24 August.

Mr Miller said: “Deutsche Bank closed this as a result of it not achieving the required funds under management, but it was just over £3.3m.”

He added: “I cannot speak for ETF companies such as Deutsche Bank as they have their own rules and there is an issue of critical mass.

“It seems the first ETFs to launch on any index gain the critical mass and the others that follow are then deemed non-economical. But there is a question of different strategies and sometimes investors do not want a massive fund but they want to follow a different strategy.”

Michael Mohr, head of exchange-traded product development, Emea, for DB X-Trackers, said: “We have conducted a review of our product range and decided to close certain ETFs that have demonstrated sustained small levels of demand. This is normal practice for a large provider of mutual funds. The closure of the SCM Multi-Asset ETF took place as part of this review.”

Adviser View

Matthew Bird, IFA and mortgage adviser at restricted whole of market adviser Seer Green, based in Gwent, said: “We tend to be wary about using ETFs because of the potential for counterparty risks, so we would tend to opt for a straightforward tracker fund.

“It is basically because of the unknown risk. The fact that it has been closed because of its size is basically the same with any fund as they will also have a certain size they have to reach to be able to pay their costs.”