17/11/2021 | Press Release

German fund industry heading for best sales year ever

  • All-time high for new retail fund business
  • Sustainable funds account for one quarter of all inflows
  • Property funds manage EUR 267 billion

The German fund industry saw inflows to the tune of EUR 167.9 billion by the end of September, effectively heading for a record year. 2015 was the best sales year, with fund companies registering EUR 186.6 billion in inflows from the beginning of January to the end of December. At EUR 85.9 billion year to date, open-ended retail funds have already surpassed their year-2000 record high. During that year, these funds generated inflows totalling EUR 74.6 billion from the beginning of January to the end of December. During year to date 2021, open-ended Spezialfonds attracted inflows of EUR 79.9 billion and closed-ended funds raised EUR 4.4 billion. Investors withdrew EUR 2.3 billion from discretionary mandates. The new business of the fund industry equates to over 4 per cent of the assets as at the beginning of the year (EUR 3,852 billion). As at the end of September, fund companies in Germany managed assets totalling EUR 4,183 billion.

Equity funds account for over half of new business
With inflows of EUR 42.9 billion, equity funds have been acting as key sales drivers within the open-ended retail fund segment. Of this amount, actively managed funds and equity ETFs account for EUR 25.2 billion and EUR 17.7 billion respectively. In terms of investment focus, funds that invest globally dominate (EUR 21.7 billion). As at the end of September, equity funds managed assets totalling EUR 586 billion. This is 28 per cent more than at the beginning of the year (EUR 459 billion). With inflows totalling EUR 29.6 billion, balanced funds rank second on the sales chart. Of these inflows, EUR 16.4 billion went to funds that invest equally in equities and bonds. Balanced funds with a focus on either equities or bonds collected EUR 6.6 billion each. In total, balanced funds managed assets to the tune of EUR 379 billion. Bond funds attracted EUR 6.7 billion in fresh capital. Half of all new business originated from funds with a focus on corporate bonds. As at mid-year, this fund group superseded bond funds primarily investing in euro-denominated bonds with a short residual maturity as the largest segment in terms of volume. As at the end of September, corporate bond funds accounted for assets totalling EUR 46 billion. This is a fifth of the assets of all bond funds, which total EUR 229 billion.

Sustainable products account for 13 per cent of fund assets
By the end of September, sustainable funds recorded inflows totalling EUR 41.6 billion. This corresponds to a 25 per cent share in the fund industry's total new business. In accordance with the EU Sustainable Finance Disclosure Regulation, which entered into force on 10 March 2021, only products classified by members as ‘Article 8 Funds’ (funds that have a sustainability strategy) or ‘Article 9 Funds’ (funds that support sustainability goals) are deemed to be sustainable. With a volume of EUR 38.8 billion, sustainable retail funds dominate new business. Accordingly, sustainable products contribute 45 per cent of all inflows into retail funds. In contrast, sustainable Spezialfonds only recorded inflows totalling EUR 2.8 billion. However, this figure probably underestimates the prevalence of the sustainability approach among these funds for institutional investors, such as churches, foundations and retirement benefit schemes. As Spezialfonds tend to structure their investment strategies individually in any case, there is hardly any incentive for fund companies to formally classify these funds as sustainable under Article 8 or 9 of the Sustainable Finance Disclosure Regulation. As at the end of September, the fund industry managed assets totalling EUR 452 billion in sustainable funds, of which EUR 339 billion is managed by retail funds and EUR 113 billion by Spezialfonds.

Property funds focus on real estate located in Germany
The net assets of property funds grew from EUR 238 billion (end of September 2020) to EUR 267 billion over the past 12 months. This equates to an increase of 12 per cent. Open-ended Spezialfonds accounted for EUR 129 billion, open-ended retail funds accounted for EUR 124 billion and closed-ended funds accounted for EUR 14 billion.

An analysis of open-ended property funds shows that they have intensified their focus on real estate located in Germany over the past ten years. Accordingly, based on market value, retail funds increased their share from 30 to 38 per cent while Spezialfonds saw their share grow from 49 to 72 per cent. The share of US real estate in retail funds grew particularly strongly, doubling from 4 to 8 per cent. In contrast, property funds reduced their share of real estate located in France.

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