DWS, the asset manager majority owned by Deutsche Bank, plans to grow its passive and alternatives businesses as part of a three year, €70m investment programme.
The Frankfurt-headquartered fund house unveiled the plan to “grow shareholder value and to tap into the company’s full potential” on 7 December.
It includes expanding investment capabilities in the Americas and Asia Pacific via strategic partnerships.
To fund the plan, DWS said it will “reallocate financial resources from other parts of the business”, having identified several areas where it can reduce costs by around €100m.
This includes selling certain businesses and saving costs in other areas, such as overhauling its IT platform.
DWS wants to grow passive assets under management by more than 12% each year up to 2025, and has set a 10% annual growth target for its alternatives business.
The asset manager’s Xtrackers business is currently Europe’s third largest exchange traded funds provider behind iShares and Amundi.
DWS said it wanted to reclaim the number two spot in Europe, having been overtaken after Amundi’s acquisition of Lyxor last year. It has also embarked on a growth plan in the US.
The growth plan for Xtrackers come as ETFs continue to gather significant assets. Data from consultancy ETFGI shows that the European ETF industry pulled in $7.3bn of net inflows during October alone, bringing the sector’s total haul for the year so far to $69bn.
READ DWS boss Stefan Hoops hits back at ‘critical reporting’ on asset manager
In the US, ETFs have gathered almost $503bn since January.
“We have a strong brand in Europe, but we have been underinvesting in the US for some time,” Stefan Hoops, chief executive of DWS, told journalists. “When large market leaders are investing a lot , you can either invest a lot or get out. There is no point starving a franchise.”
On alternatives, Hoops said the €126bn division was “the best kept secret at DWS”.
“When you look at growth trends for alternatives, market research suggests alternatives will continue to grow because of supply and demand factors — the demand side being retail being much more interested in alternatives, and on the supply side the expectation banks will provide less balance sheet lending to the real economy.
“We feel that combination of supply and demand is our right to compete. We understand retail and we have established sourcing channels, not just through Deutsche Bank, but other banking partners.”
The asset manager, which has seen its share price fall by around 11% this year, said it plans to pay a special dividend to shareholders of up to €1bn in 2024.
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To contact the author of this story with feedback or news, email David Ricketts