Deutsche lists world's first Pakistan and Bangladesh ETFs

Deutsche Bank has listed the first ever ETFs linked to Pakistan and Bangladesh on the Singapore Stock Exchange.

It has also listed ETFs which provide exposure to Singapore and Asia Pacific ex-Japan. All four ETFs - which are part of the bank's ETF platform, db X-trackers - track the relevant MSCI indices.

The launches are part of Deutsche Bank's focus on single Asian country ETFs. "In 2008 we launched an ETF linked to another frontier market: Vietnam. Now this ETF is the largest single country frontier market ETF in the world with US$270 million assets under management," explains Marco Montanari, director, head of Deutsche Bank ETFs and db-X funds Asia.

"One year and half ago we launched an ETF linked to Indonesia and now this ETF has $140 million assets under management. We have the same ambition for our ETFs on Pakistan and Bangladesh. There is an increasing demand to access products for frontier and emerging markets."

There has also been a recent shift in focus on emerging markets; Montanari explains that pre-2010 a lot of the single country emerging market inflows went into the Bric countries. Last year inflows into other single emerging market ETFs increased to $4.3bn - almost as high as the Brics, which had $4.8bn of inflows.

Montanari says that investing in frontier markets such as Pakistan and Bangladesh brings diversification benefits to a portfolio. He adds: "When we look at Pakistan and Bangladesh they are among the 10 most populated countries in the world and both markets present interesting characteristics."

He says that with Pakistan having a market cap/GDP ratio of 20% (compared to a 45% average across emerging markets) it has potential for capital growth.

"Bangladesh had an average annual GDP growth of over 6% in the last five years with a poverty rate in decline... also thanks to a strong export growth boosted by light manufacturing cost which stand at around 15% of coastal China," he says.

Montanari expects interest in all four ETFs to come from fund of funds with a focus on frontier markets, hedge funds and high net worth investors.

Deutsche Bank already has ETFs tracking Asia ex-Japan and Pacific ex-Japan but following demand from Asian clients, it decided to complete its product range with an Asia Pacific ex-Japan ETF.