BVI: German fund industry manages EUR 3,850 billion in assets
- Third-best sales year for funds
- Retail funds: sustainable products account for 50% of new business
- Equity funds see high inflows
’Despite the corona crisis, the German fund market performed very well throughout 2020, posting record holdings of EUR 3,850 billion. The high inflows underscore the important role of funds for retirement provisions and demonstrate the importance of the distribution channels during turbulent times at the stock market’, said Alexander Schindler, President of the German Investment Funds Association BVI, at the Association's annual press conference. The fund industry's growth trend continues unabated: compared to the end of 2010 (EUR 1,832 billion), the total assets managed by the industry have more than doubled. ’Germany has been the largest fund market in Europe for many years now’, Schindler added. According to the European Central Bank, Germany now accounts for 24 per cent of all fund assets held by investors in Europe, followed by France and the UK with 14 per cent each and Italy with 9 per cent.
With assets to the value of EUR 1,998 billion, open-ended Spezialfonds are the largest fund group in Germany. Together with discretionary mandates to the tune of EUR 652 billion, almost 70 per cent of the total assets managed by fund companies are attributable to purely institutional business, compared to 61 per cent ten years ago. Insurance companies and retirement benefit schemes, such as company pension schemes, have ranked among the largest institutional investor groups for many years now. As a result, fund companies manage a large share of the social security capital, even though people often have different access via life insurance policies, pension schemes or employers.
Private investors use funds for regular savings
Taking the corona crisis into consideration, 2020 was a very good sales year, with fresh inflows to the tune of EUR 127 billion from investors into retail funds and Spezialfonds. This was the third-best sales year for funds.
At EUR 80 billion, open-ended Spezialfonds accounted for 63 per cent of new fund business. Open-ended retail funds recorded inflows totalling EUR 43 billion. This is more than for 2018 (EUR 22 billion) or 2019 (EUR 17 billion). In particular, the fact that private investors save on a regular basis represents a stable component in the new business for funds. ’As savings accounts no longer yield any returns, we have been seeing a growing interest in fund savings plans’, said Schindler. ’The low interest rates have therefore achieved what many years of financial education and the promotion of a shareholder culture could not do.’ According to BVI members, the respective number of savings plans has significantly increased over recent years. It is estimated that, by now, well in excess of 10 million German investors regularly pay into their fund savings plans.
Sustainable funds account for 50% of new business
Sustainable retail funds are a special growth area, recording inflows of new money in the amount of EUR 20.6 billion net last year. As a result, almost half of the retail fund segment's new business originates from sustainable funds. In 2017, their share in new business was only 6 per cent. This momentum has boosted the volume growth of sustainable funds in Germany within just a few years. As at the end of 2020, sustainable retail funds and Spezialfonds managed assets totalling EUR 147 billion. It took the entire German fund market around 40 years from its inception in 1950 to reach a comparable size.
Equity funds remain in demand despite market turmoil
Equity funds top the sales ranking of open-ended retail funds, posting inflows of EUR 20.9 billion net. Compared to the previous year
(EUR 4.5 billion), their new business grew almost five-fold. This is remarkable, given that the sell-off at the stock market triggered a EUR 14 billion outflow from equity funds in March alone.
Balanced funds place second in the sales ranking. They registered inflows of EUR 10.1 billion in 2020, which corresponds to the level of the previous year (EUR 10.6 billion). With inflows of EUR 8.3 billion, property funds rank third in terms of new business.