Amundi launched a second share class of Europe’s lowest-fee all-world ETF to meet the burgeoning demand from German retail investors for the strategy.
The Amundi Prime All Country World UCITS ETF (WEBG) debuted on Deutsche Boerse earlier this year with a total expense ratio (TER) of 0.07%, fees less than half of its closest competitor capturing developed and emerging markets.
According to Arne Scheehl, head of product development and engineering for Germany and Austria at Amundi, WEBG has proven to be a “strong fit” for retail investors, thanks to its low fees, diversified portfolio and the reduced importance this investor cohort places on popular branded indices.
As such, Amundi decided to launch an accumulating share class of the same strategy.
"We initially launched only a distributing share class, but after receiving feedback from retail investors requesting an accumulating option, we introduced it in June,” said Scheehl.
“The original plan was to offer just the distributing class, but the accumulating option makes sense for retail investors who do not need regular cash flow, since they can benefit from compounding returns over time.”
The demand from retail investors can be tied to multiple factors.
Scheehl said having a single product covering all equities is ideal for retail investors since investors will not have to choose a specific strategy or geographic region.
He also noted the strategy’s affordability makes it especially appealing for retail investors who prioritise long-term holdings and focus on fees when assessing cost of ownership.
Strong reception from German retail investors highlights the strength of the individual investor space in the country, mainly driven by the rapid adoption of ETF savings plans.
Despite WEBG raking in $2bn of assets since its inception, Scheehl said the lack of brand recognition – namely not having MSCI in the name – may have still impeded some retail adoption.
Scheel explained, “If people search for popular terms they have seen in the media, like "MSCI All Country World," the product might not appear in a search.
“While it can be found through platforms with search filters, this is a trade-off for lower fees, as the lack of branding is part of the model.”
In a similar vein, this week DWS launched the Xtrackers Scalable MSCI AC World Xtrackers UCITS ETF (SCWX) in partnership with German investment platform Scalable Capital.
