DEACCUMULATION: THIS UGLY WORD COULD SOLVE THE SAVINGS CRISIS - DWS
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SOLUTIONS
March 2018
DEACCUMULATION: THIS UGLY WORD
COULD SOLVE THE SAVINGS CRISIS
For many western countries, longer lives and inadequate savings may require a shift from
conservative annuities to a controlled rise in the growth exposure of post-retirement portfo-
lios. Asset managers have a vital role to play.
SUMMARY
I
n many developed nations the model of investing What is more, a person’s remaining life span is more
for old age has failed to adapt to demographic important in determining portfolio risk tolerance than
change and is ill-suited to the financial pressures their current age because it dictates the relevant time
to come. Rising dependency ratios and inadequate horizon of investments. A longer horizon should lead to
savings mean that those approaching retirement today a greater allocation in growth/risk assets as the prob-
are vulnerable. ability of them outperforming fixed income annuities
rises.
For example in America just two-thirds of households
have retirement savings and the median pot is just So the need for more money over more years means
$100,000. Likewise the average British worker at that growth investments must be extended beyond
retirement can expect an annuity less than the state the asset accumulation phase. One-quarter of UK
pension. In Germany perhaps a fifth of people retiring retirees eventually return to work. In the US, a fifth of
in 15 years face poverty. the over 65 population participates in the labour force
and should live for another two decades. By 2050, the
There are three fixes: work longer, start to save more or average 75 year old German will reach 90.
earlier, or higher investment returns. One and two are
longer-term solutions. But for today’s soon-to-be retir- Deaccumulation strategies that allow for a man-
ees the only hope is a higher returns on their savings. aged drawdown of funds in retirement, a certainty
The best way to do this is by increasing the growth of income, while still providing controlled exposure
profile using a so-called deaccumulation strategy. to growth assets would hugely benefit this retired or
near-retired population. Such innovations are urgently
Asset managers are ideally placed to offer this, having need to help solve the looming savings crisis.
long met the asset accumulation phase of a person’s
lifecycle with growth portfolios. Yet post-retirement has Finally, a higher allocation into growth assets also
historically been covered by insurance annuities, using directs savings into more productive investments,
very conservative allocations unsuited to boosting spurring economic dynamism. This is a chance for the
returns. financial services industry to demonstrate the vital role
it can play for society.
Anthony Lupa Stuart Kirk Rineesh Bansal
Retirement Solutions Head of Global Associate Director
anthony.lupa@db.com Research Institute Global Research Institute
stuart.kirk@db.com rineesh.bansal@db.com
For Qualified Investors (Art. 10 Para. 3 of the Swiss Federal Collective Investment Schemes Act (CISA).
For Professional Clients (MiFID Directive 2014/65/EU Annex II) only. For Institutional investors only.
Further distribution of this material is strictly prohibited. Not suitable for the retail market.GLOBAL RESEARCH INSTITUTE
Today’s retirement model is broken
If demography is destiny, one would expect societies three US workers for each person over 65 years old1.
to be well-prepared for the future. Demographic trends (Figure 1)
2
move at a glacial pace with deviations unfolding over
decades or generations rather than years. And yet Not only is social security under pressure in future,
western societies somehow find themselves behind American retirees are unprepared now. Almost 40 per
the curve. In particular, the current model of investing cent of households in the 55 to 64 age group have no
for old age has failed to adapt to demographic shifts retirement savings whatsoever2. Even among the rest,
and is consequently ill-suited to pressures down the the median savings pot is a little over $100,000. A 60
road. year old with this level of savings can expect an
inflation-protected annuity income of $3,700 per year
Retirement savings are supposed to deliver a nearly – not enough to fund a post-retirement life by itself.
risk-free adequate income for the entirety of a worker’s
post-retirement life span. In the US, for instance, social Nor is this a case of US exceptionalism. The problem of
security makes up over half of the household income people approaching retirement with inadequate
for over 65s. Social security relies on the tax payments savings afflicts many western societies. The average
of current and future workers. This works nicely when pension pot for a British citizen near retirement is about
populations were growing and dependency ratios £100,0003. Once again, by itself, this would be inade-
remained low. quate to fund a reasonable lifestyle. Indeed, as an
annuity it would produce less income than the UK
However this model is vulnerable as dependency ratios state pension of around £8,000 per year. And in
begin to rise sharply. Four decades ago there were six Germany, a study by the Bertelsmann Foundation
working age Americans for every over 65 year old. It predicts that one in five people retiring between 2031
took 35 years for that ratio to drop to five workers in and 2036 will likely face old-age poverty.
2012. But in just seven years from then, by 2019, the
ratio will decline to four workers. And in less than a
decade after that, before 2030, there could be just
Figure 1: Number of working age people per over-65 population
9
8
7
6 in 1977
6
5 in 2012
5
4 in 2019
4
35 years for the ratio 3 in 2029
to drop from 6 to 5
3
2 7 years
to drop
from
1 5 to 4
0
1950 1960 1970 1980 1990 2000 2010 2020 2030
Source: United Nations, Haver Analytics
1 United Nations World Population Prospects, Haver Analytics
2 Government Accountability Office report 2015. Some of these households without any retirement savings are covered by a defined benefit pension plan.
Over a quarter of 55 – 64 aged households have no retirement savings and no defined benefit plan.
3 Telegraph article citing Aegon research, August 22, 2017
Forecasts are based on assumptions, estimates, opinions and hypothetical models or analysis which may prove to be incorrect.GLOBAL RESEARCH INSTITUTE
Underlying assumptions need to change
There are three ways out of this mess. For people to three reasons. First, the depletion of human capital at
reach retirement age with bigger investment pots they retirement meant there was no opportunity to offset
3
need to work longer, start to save more/earlier, or earn potential losses with more earnings. Second, the
more on their investments. Encouraging such behav- typical post-retirement life expectancy was low thereby
iour should be a priority of public policy – for example rendering the investment time horizon too short for
initiatives to improve financial literacy or incentives to holding risky assets. And finally, the requirement to
save while working. However these measures would at back annuity incomes with regulatory guarantees
best show results over the course of generations. forced even safer investment styles.
Those close to approaching retirement, however, But changing demographics over the past few decades
do not have the luxury of time. What is more, the make it imperative to revisit these underlying assump-
rock-bottom interest rates of recent years have com- tions. Start with the idea that by the age of 65, human
pounded the problem by shrivelling their potential capital and future earnings are largely depleted. A
annuity incomes. For this cohort, the solution must recent academic study in Britain found that one-quar-
involve making more of their savings. One way to do ter of retirees return to work, mostly within five years
this is by increasing the growth exposure profile of of retiring1. In America, a fifth of the over 65 population
post-retirement portfolios. now participates in the labour force. This proportion
has doubled over the past quarter of a century. Indeed,
To simplify, the current annuity model is based on a the labour force participation rate for 65 to 69 year old
shift to bond-only or other low risk strategies at the Americans now almost matches that among 16 to 19
onset of retirement. This approach was arrived at for year olds2. (Figure 2)
Figure 2: US labour force participation rate
70
60
50
40
30
20
10
0
01/1982 01/1987 01/1992 01/1997 01/2002 01/2007 01/2012 01/2017
65-69 years 16-19 years
Source: Bureau of Labor Statistics, Haver Analytics
More people working until later in life is a result of estimates that someone reaching 65 today can expect
improving life expectancy. Go back half a century and to live for another two decades, with a quarter of peo-
in many western nations, as people reached the age ple living more than 25 years. Similarly, demographic
of 65, their remaining life expectancy was about 15 studies show that by 2050 a 75-year old German could
years. The Social Security Administration in America have 15 years left to live on average3.
1 “Returns to work after retirement: a prospective study of unretirement in the United Kingdom”
2 US Bureau of Labor Statistics, Household Survey
3 Sanderson WC, Scherbov S, Gerland P (2017) Probabilistic population aging. PLoS ONE 12(6): e0179171
Forecasts are based on assumptions, estimates, opinions and hypothetical models or analysis which may prove to be incorrect.GLOBAL RESEARCH INSTITUTE
Portfolios are too conservative
Unfortunately, the risk profile of post-retirement por- Furthermore, a cautious post-retirement investment
tUnfortunately, the risk profile of post-retirement port- style is exacerbated by the requirement to back annuity
4
folios fails to reflect these shifts. A person’s remaining incomes with a guarantee protecting against the sol-
life span is more important in determining portfolio vency risk of the entity managing the portfolio. Guaran-
risk tolerance than their current age because it dictates tees require some form of regulatory capital backing,
the relevant time period of investments. All else being which in turn are a function of the level of portfolio
equal, a longer investment time horizon should lead to risk. The economic cost of such guarantees, however,
a greater allocation in growth/risk assets, such as equi- is prohibitively expensive on risky assets, and thus the
ties, in portfolios as the probability of them outperform- presence of guarantees leads to low-risk, conservative
ing increases with the investment time horizon. portfolio exposures.
Consider the performance of the S&P 500 stock index A good example of this are savings contracts provided
and the ten-year Treasury bond over the last 35 years. by insurance companies in Germany’s Riester system.
Over a decade total returns from the equity market had These have been notably conservative in their underly-
a one-quarter probability of trailing bond returns – per- ing investments and have performed poorly relative to
haps an unacceptably high risk to take on for someone more growth oriented investments over similar periods.
reaching retirement. However, extend the investment Mandatory guaranteed income products, therefore,
horizon to 20 years, and the chance of stocks under- may perversely harm rather than serve the best inter-
performing bonds drops to just three per cent. (Figure ests of some people approaching retirement.
3) This suggests that the logic underpinning ultra-con-
servative post-retirement investment style needs to be
re-examined in the light of shifting demographics.
Figure 3: Probability of the total returns from the US 10-year Treasury bond exceeding
S&P500 index by holding period
40%
32%
23%
3%
1 year 5 years 10 years 20 years
Source: Bloomberg, Deutsche Asset Management calculations. Forecasts are based on assumptions, estimates, opinions and hypothetical models or
analysis which may prove to be incorrectGLOBAL RESEARCH INSTITUTE
Society suffers too
If overly cautious investments are not serving the best This in turn erodes economic dynamism. Pushing
interests of retirees, they are proving even worse for retirement savings into riskier assets associated with
5
society. It is historically the case that older people business investment would therefore help channel
own more financial assets than the young who are in retirement capital back into this space and give a shot
the process of building up wealth. However, the gap in the arm to the free market agents. Such capital
between the young and old has widened considera- allocations could be a source of jobs and other career
bly over the past few decades. In America, families opportunities for a younger generation upset about
headed by someone over 62 and those headed by a losing out economically.
40 to 61 year old had roughly the same median wealth
in 1989. By 2013, however, the median wealth of the It is also in the interests of the soon-to-be-retired
older households was twice that of the middle-aged population to ensure the next generation is equipped
families.1 with adequate capital. These future workers will be
shouldering the responsibility of many more depend-
As well as older households becoming relatively richer, ents than the past. The number of dependents per
the proportion of older households in the population is every German worker is likely go up from 0.5 currently
also growing. The proportion of US households over to 0.75 within two decades4. That one worker will need
55 years old rose from one-third in 1995 to 42 per to be equipped with a lot of capital to ensure they are
cent now2. The combined effect of older households productive enough to sustain the heavier burden.
increasing both their relative number and their relative
wealth has been to concentrate assets among the
retired or near-retired. In 1995, the over 55s held half
of the net worth of US households. This share was ap-
proaching two-third of household net worth by 20133.
With an ever greater proportion of net worth controlled
by such households, their choices for the deploy-
ment of wealth has material implications for society
as a whole. This vast pool of wealth chasing low risk
assets pushes government bond yields down and has
contributed to the secular decline in yields over the last
30 years. At the margin, private investment is crowded
out.
1 St Louis Federal Reserve, “The Demographics of Wealth”, Essay no. 3: Age, Birth year and wealth, July 2015
2 US Census Bureau Survey of Income and Program Participation
3 US Census Bureau Survey of Income and Program Participation, DeAM calculations
4 United Nations World Population Prospects, Haver AnalyticsGLOBAL RESEARCH INSTITUTE
Deaccumulation to the rescue
Clearly there is a lot at stake in effecting the overhaul power of sustainable withdrawals over time, which
of the current retirement investment model. How to necessarily requires some, albeit tightly controlled,
6
go about it though, and what should be the principles exposure to growth assets.
guiding the new approach? One way to answer this
question is by taking the investors’ point of view, ex- These three requirements create significant constraints
amining their circumstances from the bottom up, and on portfolio management. The need for flexibility can
assessing what strategies could work for them. most easily be met with investments that are highly
liquid, and the need for growth with liquidity leads to
Start with a holistic view of the key objectives of investments in equities. However, uncontrolled equity
investors over their entire investment life cycle, and investments would be highly unfavourable to a strate-
recognise that these objectives materially change over gy seeking certainty of outcomes.
time. They can be roughly characterised as accumula-
tion objectives, transition objectives, and deaccumula- This gives rise to a key risk relevant to the early years of
tion objectives. This latter phase, corresponding to the retirement, so-called “dollar-cost ravaging” – whereby
post-retirement time period, has three critical require- the dollar-weighted portfolio returns can dramatically
ments: certainty, flexibility, and growth. trail time-weighted returns due to portfolio withdraw-
als. Typically, the size of the portfolio is at its greatest
Certainty is the relative surety about the level, shape in the early years of retirement thereby magnifying
and longevity of income – in other words the ability to the importance of returns in that phase. Indeed, poor
be confident that portfolio withdrawals will be possible returns early on coupled with periodic withdrawals
in the amount desired over the anticipated time frame. create the risk of portfolios being depleted before
Flexibility is the ability to modify (including and up to subsequent better returns materialise. As an illustra-
liquidation) product features to adjust to post-retire- tion, three portfolios might produce the same returns
ment life, including active retirement, potential health over 20 years on a time-weighted basis but on dol-
changes, end-of-life planning, and so on. Growth is the lar-weighted an adverse sequence of returns could
portfolio requirement to maintain the real spending cause a portfolio run out of money far earlier. (Figure 4)
Figure 4: Total returns under three scenarios – time-weighted1
600%
500%
Portfolio balance
400%
300%
200%
100%
0%
0 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Years
Client 1 Client 2 Client 3
The same portfolios with level withdrawals (dollar-weighted returns)1
400%
300%
Portfolio balance
200%
100%
0%
-100%
-200%
-300%
-400%
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Years
Client 1 Client 2 Client 3
1 For illustrative purposes only.GLOBAL RESEARCH INSTITUTE
It is, however, possible to manage this risk while Traditional asset management products for the deaccu-
still maintaining an allocation to growth assets and mulation phase typically fare poorly with respect to the
providing for portfolio flexibility. Figure 5 is a simplified key objectives of certainty (due to no specific outcome
illustration of an asset allocation process of controlling targeting) and growth (due to highly conservative
7
growth exposure in order to protect pre-defined allocations). On the other hand, insurance annuities
payments. In this example, payments are specified to fare well on certainty but fare poorly on flexibility and
be at level five (representing five per cent of the initial growth. Financial innovation is needed to bridge these
capital), but at each year are increased in line with in- gaps and find solutions that coordinate all critical
flation should that be possible relative to the size of the investor objectives.
portfolio. A dynamic strategy adjusts the exposure to
the growth portfolio in order to ensure that this occurs. Demographic trends make it clear that in developed
countries, the asset accumulation stage – the market
Dynamic strategies, in general, allocate between lower segment the asset management industry predomi-
risk investments that aim to deliver capital preservation nantly occupies – is not the end of the growth story.
and higher risk investments that aim to deliver capital Over the next quarter of a century, the 15 to 40 age
appreciation. Shown here is an enhanced dynamic group population in the UK, for instance, is projected to
strategy that seeks to incorporate market information grow by just three per cent. But the over 65 population
about trends and volatility into the allocation process. should increase by nearly half over this period. Meeting
Based on this identification in the underlying markets, its needs for new financial products to manage asset
the strategy aims to: drawdowns is the massive opportunity of the next few
decades.
– Achieve an efficient allocation to the growth com-
ponent. It seeks to increase exposure to the growth
component when equity markets are trending up-
wards and volatility is low.
– Reduce the investment level in declining markets. It
seeks to reduce exposure to the growth component
when equity markets are trending downwards and/or
volatility is high.
New product innovations such as this have a vital part
to play in solving the looming pension crisis. The asset
management industry must design financial prod-
ucts that are better suited to meet society’s changing
needs. There has been too little innovation in this space
and more is desperately required. This is a chance
for the financial services industry to demonstrate the
importance of the service it provides to society.
1 For illustrative purposes only.
Forecasts are based on assumptions, estimates, opinions and hypothetical models or analysis which may prove to be incorrect.GLOBAL RESEARCH INSTITUTE
Figure 5: Strategy simualtion for recent (adverse) periods1
180 Illustrated payments Amount
Total protection is the sum of
160 payments made and future May 95 5 / unit
May 96 5 / unit 8
140 payments protected
May 97 5 / unit
120 May 98 6 / unit
Strategy value
100 May 99 6 / unit
May 00 6 / unit
80 May 01 6 / unit
60 May 02 6 / unit
May 03 6 / unit
40
Allocation
May 04 6 / unit
20 100% May 05 7 / unit
0 0% May 06 7 / unit
08/97 08/00 08/03 08/06 08/09 08/12 08/15 May 07 7 / unit
May 08 7 / unit
Allocation to Performance Asset Strategy Value
May 09 7 / unit
Total Effective Protection
May 10 8 / unit
May 11 8 / unit
May 12 8 / unit
140
May 13 9 / unit
120 May 14 9 / unit
Residual strategy 86 / unit
100 value
Total of all 222 / unit
Amount per unit
80 distributions
60
Total protection at any point in time is
40 the sum of
1) Future protected payments
20 2) Payments actuaklly made
0
08/97 08/00 08/03 08/06 08/09 08/12 08/15
Current total of protected future payments Payment amounts
Total of payments made Total effective protection
Conclusion
This paper argues that the current model of retirement New financial products that allow for a managed draw-
investing suffers from excess conservatism especial- down of assets in retirement with certainty of income
ly in the early years of retirement. A combination of while still providing controlled exposure to growth
insufficient pension pots, low interest rates and longer assets would benefit the retired or nearing-retirement
life expectancy make this model unsustainable for gen- population. In addition, this higher allocation into
erating adequate incomes to fund the post-retirement growth assets, will channel these savings into more
years. In addition, stretched government finances and productive investments, helping restore some lost
rising dependency ratios make ongoing public fund- economic dynamism and address inter-generational
ing support suspect. Therefore, the financial planning fairness issues in the process.
model needs to change alongside changing demo-
graphics.
1 Source: Deutsche Asset Management, February 2018. Using MSCI All Country GBP / UK Gilts data from August 1997 to August 2017. For illustrative
purposes only. Past performance is not indicative of future returns.
Forecasts are based on assumptions, estimates, opinions and hypothetical models or analysis which may prove to be incorrect.GLOBAL RESEARCH INSTITUTE
IMPORTANT INFORMATION – UK
9
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Deutsche Asset Management is the brand name of the Asset Management division of the Deutsche Bank Group.
The respective legal entities offering products or services under the Deutsche Asset Management brand are
specified in the respective contracts, sales materials and other product information documents. Deutsche Asset
Management, through Deutsche Bank AG, its affiliated companies and its officers and employees (collectively
“Deutsche Bank”) are communicating this document in good faith and on the following basis.
This document has been prepared without consideration of the investment needs, objectives or financial circum-
stances of any investor. Before making an investment decision, investors need to consider, with or without the
assistance of an investment adviser, whether the investments and strategies described or provided by Deutsche
Bank, are appropriate, in light of their particular investment needs, objectives and financial circumstances. Fur-
thermore, this document is for information/ discussion purposes only and does not constitute an offer, recom-
mendation or solicitation to conclude a transaction and should not be treated as giving investment advice.
Deutsche Bank does not give tax or legal advice. Investors should seek advice from their own tax experts and
lawyers, in considering investments and strategies suggested by Deutsche Bank. Investments with Deutsche
Bank are not guaranteed, unless specified. Unless notified to the contrary in a particular case, investment instru-
ments are not insured by the Federal Deposit Insurance Corporation (“FDIC”) or any other governmental entity,
and are not guaranteed by or obligations of Deutsche Bank AG or its affiliates.
Past performance is no guarantee of current or future performance. Nothing contained herein shall constitute any
representation or warranty as to future performance.
Investments are subject to various risks, including market fluctuations, regulatory change, counterparty risk,
possible delays in repayment and loss of income and principal invested. The value of investments can fall as well
as rise and you may not recover the amount originally invested at any point in time. Furthermore, substantial
fluctuations of the value of the investment are possible even over short periods of time.
This publication contains forward looking statements. Forward looking statements include, but are not limited
to assumptions, estimates, projections, opinions, models and hypothetical performance analysis. The forward
looking statements expressed constitute the author’s judgment as of the date of this material. Forward looking
statements involve significant elements of subjective judgments and analyses and changes thereto and/ or con-
sideration of different or additional factors could have a material impact on the results indicated. Therefore, actual
results may vary, perhaps materially, from the results contained herein. No representation or warranty is made
by Deutsche Bank as to the reasonableness or completeness of such forward looking statements or to any other
financial information contained herein. The terms of any investment will be exclusively subject to the detailed
provisions, including risk considerations, contained in the Offering Documents. When making an investment deci-
sion, you should rely on the final documentation relating to the transaction and not the summary contained here-
in. This document may not be reproduced or circulated without our written authority. The manner of circulation
and distribution of this document may be restricted by law or regulation in certain countries, including the United
States. This document is not directed to, or intended for distribution to or use by, any person or entity who is a cit-
izen or resident of or located in any locality, state, country or other jurisdiction, including the United States, where
such distribution, publication, availability or use would be contrary to law or regulation or which would subject
Deutsche Bank to any registration or licensing requirement within such jurisdiction not currently met within such
jurisdiction. Persons into whose possession this document may come are required to inform themselves of, and
to observe, such restrictions.
Kingdom of Bahrain
For Residents of the Kingdom of Bahrain: This document does not constitute an offer for sale of, or participation
in, securities, derivatives or funds marketed in Bahrain within the meaning of Bahrain Monetary Agency Regula-
tions. All applications for investment should be received and any allotments should be made, in each case from
outside of Bahrain. This document has been prepared for private information purposes of intended investors only
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will not be issued, passed to, or made available to the public generally. The Central Bank (CBB) has not reviewed,
nor has it approved, this document or the marketing of such securities, derivatives or funds in the Kingdom of
Bahrain. Accordingly, the securities, derivatives or funds may not be offered or sold in Bahrain or to residents
thereof except as permitted by Bahrain law. The CBB is not responsible for performance of the securities, deriva-
tives or funds.GLOBAL RESEARCH INSTITUTE
IMPORTANT INFORMATION – EMEA (2/2)
12
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private placement or public offering is, therefore, restricted in accordance with Decree Law No. 31 of 1990 and
the implementing regulations thereto (as amended) and Law No. 7 of 2010 and the bylaws thereto (as amended).
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P.O. Box 301809, Faisaliah Tower - 17th Floor, 11372 Riyadh, Saudi Arabia.
United Arab Emirates
Deutsche Bank AG in the Dubai International Financial Centre (registered no. 00045) is regulated by the Dubai
Financial Services Authority. Deutsche Bank AG - DIFC Branch may only undertake the financial services activities
that fall within the scope of its existing DFSA license. Principal place of business in the DIFC: Dubai International
Financial Centre, The Gate Village, Building 5, PO Box 504902, Dubai, U.A.E. This information has been distrib-
uted by Deutsche Bank AG. Related financial products or services are only available to Professional Clients, as
defined by the Dubai Financial Services Authority.
This document may not be distributed in Canada, Japan, the United States of America, or to any U.S. person.
© March 2018 Deutsche Asset Management Investment GmbHGLOBAL RESEARCH INSTITUTE
IMPORTANT INFORMATION – APAC
13
Deutsche Asset Management is the brand name of the Asset Management division of the Deutsche Bank Group.
The respective legal entities offering products or services under the Deutsche Asset Management brand are
specified in the respective contracts, sales materials and other product information documents. Deutsche Asset
Management, through Deutsche Bank AG, its affiliated companies and its officers and employees (collectively
“Deutsche Bank”) are communicating this document in good faith and on the following basis.
This document has been prepared without consideration of the investment needs, objectives or financial circum-
stances of any investor. Before making an investment decision, investors need to consider, with or without the
assistance of an investment adviser, whether the investments and strategies described or provided by Deutsche
Bank, are appropriate, in light of their particular investment needs, objectives and financial circumstances. Fur-
thermore, this document is for information/discussion purposes only and does not constitute an offer, recommen-
dation or solicitation to conclude a transaction and should not be treated as giving investment advice.
Deutsche Bank does not give tax or legal advice. Investors should seek advice from their own tax experts and
lawyers, in considering investments and strategies suggested by Deutsche Bank. Investments with Deutsche
Bank are not guaranteed, unless specified.
Investments are subject to various risks, including market fluctuations, regulatory change, possible delays in
repayment and loss of income and principal invested. The value of investments can fall as well as rise and you
might not get back the amount originally invested at any point in time. Furthermore, substantial fluctuations of
the value of the investment are possible even over short periods of time. The terms of any investment will be
exclusively subject to the detailed provisions, including risk considerations, contained in the offering documents.
When making an investment decision, you should rely on the final documentation relating to the transaction and
not the summary contained herein. Past performance is no guarantee of current or future performance. Nothing
contained herein shall constitute any representation or warranty as to future performance.
Although the information herein has been obtained from sources believed to be reliable, we do not guarantee its
accuracy, completeness or fairness. Opinions and estimates may be changed without notice and involve a num-
ber of assumptions which may not prove valid. We or our affiliates or persons associated with us or such affili-
ates (“Associated Persons”) may (i) maintain a long or short position in securities referred to herein, or in related
futures or options, and (ii) purchase or sell, make a market in, or engage in any other transaction involving such
securities, and earn brokerage or other compensation.
The document was not produced, reviewed or edited by any research department within Deutsche Bank and is
not investment research. Therefore, laws and regulations relating to investment research do not apply to it. Any
opinions expressed herein may differ from the opinions expressed by other Deutsche Bank departments including
research departments. This document may contain forward looking statements. Forward looking statements in-
clude, but are not limited to assumptions, estimates, projections, opinions, models and hypothetical performance
analysis. The forward looking statements expressed constitute the author’s judgment as of the date of this mate-
rial. Forward looking statements involve significant elements of subjective judgments and analyses and changes
thereto and/or consideration of different or additional factors could have a material impact on the results indicat-
ed. Therefore, actual results may vary, perhaps materially, from the results contained herein. No representation or
warranty is made by Deutsche Bank as to the reasonableness or completeness of such forward looking state-
ments or to any other financial information contained herein.
This document may not be reproduced or circulated without our written authority. The manner of circulation and
distribution of this document may be restricted by law or regulation in certain countries, including the United
States.
This document is not directed to, or intended for distribution to or use by, any person or entity who is a citizen
or resident of or located in any locality, state, country or other jurisdiction, including the United States, where
such distribution, publication, availability or use would be contrary to law or regulation or which would subject
Deutsche Bank to any registration or licensing requirement within such jurisdiction not currently met within such
jurisdiction. Persons into whose possession this document may come are required to inform themselves of, and
to observe, such restrictions.
Unless notified to the contrary in a particular case, investment instruments are not insured by the Federal Deposit
Insurance Corporation (“FDIC”) or any other governmental entity, and are not guaranteed by or obligations of
Deutsche Bank AG or its affiliates.
© March 2018 Deutsche Asset Management Investment GmbHGLOBAL RESEARCH INSTITUTE
IMPORTANT INFORMATION – UNITED STATES
14
This marketing communication is intended for institutional investors only.
Deutsche Asset Management is the brand name of the Asset Management division of the Deutsche Bank Group.
Global Research Institute is a moniker used by Deutsche Asset Management for the purpose of publishing re-
search.
This document has been prepared without consideration of the investment needs, objectives or financial circum-
stances of any investor. Before making an investment decision, investors need to consider, with or without the
assistance of an investment adviser, whether the investments and strategies described or provided by Deutsche
Bank, are appropriate, in light of their particular investment needs, objectives and financial circumstances. Fur-
thermore, this document is for information/discussion purposes only and does not constitute an offer, recommen-
dation or solicitation to conclude a transaction and should not be treated as giving investment advice.
Deutsche Bank does not give tax or legal advice. Investors should seek advice from their own tax experts and
lawyers, in considering investments and strategies suggested by Deutsche Bank. Investments with Deutsche
Bank are not guaranteed, unless specified.
Investments are subject to various risks, including market fluctuations, regulatory change, possible delays in
repayment and loss of income and principal invested. The value of investments can fall as well as rise and you
might not get back the amount originally invested at any point in time. Furthermore, substantial fluctuations of
the value of the investment are possible even over short periods of time. The terms of any investment will be
exclusively subject to the detailed provisions, including risk considerations, contained in the offering documents.
When making an investment decision, you should rely on the final documentation relating to the transaction and
not the summary contained herein. Past performance is no guarantee of current or future performance. Nothing
contained herein shall constitute any representation or warranty as to future performance.
Although the information herein has been obtained from sources believed to be reliable, we do not guarantee its
accuracy, completeness or fairness. Opinions and estimates may be changed without notice and involve a num-
ber of assumptions which may not prove valid. We or our affiliates or persons associated with us or such affili-
ates (“Associated Persons”) may (i) maintain a long or short position in securities referred to herein, or in related
futures or options, and (ii) purchase or sell, make a market in, or engage in any other transaction involving such
securities, and earn brokerage or other compensation.
The document was not produced, reviewed or edited by any research department within Deutsche Bank and is
not investment research. Therefore, laws and regulations relating to investment research do not apply to it. Any
opinions expressed herein may differ from the opinions expressed by other Deutsche Bank departments including
research departments. This document may contain forward looking statements. Forward looking statements in-
clude, but are not limited to assumptions, estimates, projections, opinions, models and hypothetical performance
analysis. The forward looking statements expressed constitute the author’s judgment as of the date of this mate-
rial. Forward looking statements involve significant elements of subjective judgments and analyses and changes
thereto and/or consideration of different or additional factors could have a material impact on the results indicat-
ed. Therefore, actual results may vary, perhaps materially, from the results contained herein. No representation or
warranty is made by Deutsche Bank as to the reasonableness or completeness of such forward looking state-
ments or to any other financial information contained herein.
This document may not be reproduced or circulated without our written authority.
For purposes of ERISA and the Department of Labor’s fiduciary rule, we are relying on the sophisticated fiduciary
exception in marketing our services and products, and nothing herein is intended as fiduciary or impartial invest-
ment advice unless it is provided under an existing mandate.
Unless notified to the contrary in a particular case, investment instruments are not insured by the Federal Deposit
Insurance Corporation (“FDIC”) or any other governmental entity, and are not guaranteed by or obligations of
Deutsche Bank AG or its affiliates.
© March 2018 Deutsche Asset Management Investment GmbH
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