German fund industry breaks EUR 4 trillion mark
- Equity funds posted highest inflows since 2000
- Retail funds: Sustainable products account for one third of new business
- Spezialfonds manage EUR 1.3 trillion for retirement benefit schemes and insurers
As at mid-year, the German fund industry managed assets totalling EUR 4,086 billion. Of this amount, EUR 2,084 billion is invested in open-ended Spezialfonds while open-ended retail funds account for EUR 1,354 billion, discretionary mandates account for EUR 615 billion and closed-ended funds make up EUR 34 billion. Year to date (EUR 3,852 billion), total assets grew by EUR 234 billion, bolstered by net inflows to the tune of EUR 110.4 billion. From the beginning of January to the end of June, funds took in a total of EUR 117 billion in new money. Investors withdrew EUR 6.6 billion net from discretionary mandates. Retail funds and Spezialfonds accounted in equal parts for the new business of open-ended funds, recording approximately EUR 57 billion each. Closed-ended funds generated sales of EUR 2.7 billion.
Equity funds are, by far, the largest group among retail funds
With inflows of EUR 35.3 billion, equity funds topped the sales chart within the open-ended retail fund segment during the first half of the year, leading by a large margin. Actively managed funds saw inflows of EUR 19.4 billion while equity ETFs took in EUR 15.9 billion. These are the strongest equity fund inflows in the first half of any year since 2000, when equity funds generated EUR 42.7 billion in inflows. However, a look at the relative new business shows that the result of the first six months 2000 remains extraordinary. After all, those inflows equate to 24 per cent of the equity fund assets at the beginning of 2000 (EUR 180 billion). During the current year, they make up 8 per cent of the assets as at the beginning of January (EUR 459 billion). At EUR 576 billion, equity funds are the largest retail 3fund segment in terms of volume, followed by balanced funds with EUR 366 billion. Balanced funds attracted inflows of EUR 16.9 billion during the first half of the year, with EUR 10.1 billion generated by products that invest in equal parts in equities and bonds. At EUR 4 billion, property funds rank third in terms of new business, followed by bond funds with EUR 1.1 billion.
Sustainable products account for 10 per cent of fund assets
As at mid-year, the fund industry managed assets totalling EUR 361 billion in sustainable funds, of which EUR 251 billion is managed by retail funds and EUR 110 billion by Spezialfonds. In accordance with the EU Sustainable Finance Disclosure Regulation, which entered into force on 10 March, only products classified by members as ‘Article 8 Funds’ (funds that have a sustainability strategy) or ‘Article 9 Funds’ (impact funds) are deemed to be sustainable. As at the end of March, fund assets totalled EUR 335 billion.
During the second quarter, sustainable funds generated inflows to the tune of EUR 10.2 billion, with open-ended retail funds accounting for EUR 9.3 billion. This equates to a 33 per cent share in the new business of this fund group. This figure stood at 45 per cent during the first quarter.
Retirement benefit schemes increasingly favour Spezialfonds
Within the Spezialfonds segment, retirement benefit schemes (such as company pension schemes) are now the largest investor group in terms of volume, combining assets to the value of EUR 645 billion. Since mid-2016 (EUR 369 billion), their share in the total assets of funds has increased from 26 to 31 per cent.
Insurance companies have invested EUR 644 billion in Spezialfonds. Together, both groups account for 62 per cent of total assets (EUR 2,084 billion). As these figures once again clearly show, the asset management industry is of great importance to retirement planning in Germany.